IRAN: The board of the International Atomic Energy Agency voted to suspend 22 technical aid programs to Iran as part of the expansion of international sanctions on Tehran over its refusal to halt its uranium enrichment program. The widely expected decision, which stiffens the penalties placed on Iran by the U.N. Security Council on Dec. 23, 2006, was made by consensus.

A former Iranian deputy defense minister who once commanded the Revolutionary Guard has left his country and is cooperating with Western intelligence agencies, providing information on Hezbollah and Iran's ties to the organization, according to a senior U.S. official.

Ali Rez Asgari disappeared last month during a visit to Turkey. Iranian officials suggested yesterday that he may have been kidnapped by Israel or the United States. The U.S. official said Asgari is willingly cooperating. He did not divulge Asgari's whereabouts or specify who is questioning him, but made clear that the information Asgari is offering is fully available to U.S. intelligence.

Asgari served in the Iranian government until early 2005 under then-President Mohammad Khatami. Asgari's background suggests that he would have deep knowledge of Iran's national security infrastructure, conventional weapons arsenal and ties to Hezbollah in south Lebanon. Iranian officials said he was not involved in the country's nuclear program, and the senior U.S. official said Asgari is not being questioned about it. Former officers with Israel's Mossad spy agency said yesterday that Asgari had been instrumental in the founding of Hezbollah in the 1980s, around the time of the bombing of the U.S. Marine barracks in Beirut.

Iran's official news agency, IRNA, quoted the country's top police chief, Brig. Gen. Esmaeil Ahmadi-Moqaddam, as saying that Asgari was probably kidnapped by agents working for Western intelligence agencies. The Israeli newspaper Haaretz reported that Asgari was in the United States. Another U.S. official, who spoke on the condition of anonymity, denied that report and suggested that Asgari's disappearance was voluntary and orchestrated by the Israelis. A spokesman for President Bush's National Security Council did not return a call for comment.

The Israeli government denied any connection to Asgari. "To my knowledge, Israel is not involved in any way in this disappearance," said Mark Regev, the spokesman for Israel's foreign ministry.

An Iranian official, who agreed to discuss Asgari on the condition of anonymity, said that Iranian intelligence is unsure of Asgari's whereabouts but that he may have been offered money, probably by Israel, to leave the country. The Iranian official said Asgari was thought to be in Europe. "He has been out of the loop for four or five years now," the official said.

Israeli and Turkish newspapers reported yesterday that Asgari disappeared in Istanbul shortly after he arrived there on Feb. 7. Iran sent a delegation to Turkey to investigate his disappearance and requested help from Interpol in locating him.

Former Mossad director Danny Yatom, who is now a member of Israel's parliament, said he believes Asgari defected to the West. "He is very high-caliber," Yatom said. "He held a very, very senior position for many long years in Lebanon. He was in effect commander of the Revolutionary Guards" there.

Ram Igra, a former Mossad officer, said Asgari spent much of the 1980s and 1990s overseeing Iran's efforts to support, finance, arm and train Hezbollah. The State Department lists the Shiite Lebanese group as a terrorist organization.

"He lived in Lebanon and, in effect, was the man who built, promoted and founded Hezbollah in those years," Igra told Israeli state radio. "If he has something to give the West, it is in this context of terrorism and Hezbollah's network in Lebanon."

The organization, led by Hasan Nasrallah, is believed to have been behind several attacks against U.S., Jewish and Israeli interests worldwide, including the 1983 bombing of the U.S. Marine barracks in Beirut that killed 241 Americans, and the 1994 bombing of a Jewish community center in Buenos Aires that killed more than 80 people.

Israel fought a bloody, month-long war with Hezbollah last summer in south Lebanon after the group seized two Israeli soldiers. The soldiers have not been returned and their fate is unknown. Other Israeli soldiers have vanished in Lebanon during decades of conflict along the countries' shared border, most notably an Israeli airman named Ron Arad. Yatom said it is possible Asgari "knows quite a lot about Ron Arad."

In a January briefing to Congress, then-Director of National Intelligence John D. Negroponte described Hezbollah as a growing threat to U.S. interests. "As a result of last summer's hostilities, Hezbollah's self-confidence and hostility toward the United States as a supporter of Israel could cause the group to increase its contingency planning against United States interests," Negroponte said.

U.S. intelligence officials said they had no evidence that Hezbollah was actively planning attacks but noted that the organization has the capacity to do so if it feels threatened.

Correspondents Scott Wilson in Jerusalem and Anthony Shadid in Beirut and staff researcher Julie Tate contributed to this report.

Russian President Vladimir Putin on March 12 jumped into the dispute over Russia's construction of a nuclear reactor in Iran, explicitly telling state press that all work will be suspended until the Iranians resume their payments. The message between the lines is clear: Russia will not complete the Bushehr reactor -- or at least not while Putin remains president.

Analysis

Russian President Vladimir Putin on March 12 personally ordered the suspension of any transfers of nuclear materials and technologies to Iran's Bushehr nuclear power plant project, ostensibly because of Iran's unwillingness to meet its payment schedule for the project. The idea that Iran, currently flush with petrodollars and facing down the U.N. Security Council over its nuclear program, would choose this moment to stop paying its primary political backer, Russia, is an odd one.

The reality is that Putin has no intention of ever completing the Bushehr project.

The Bushehr project dates to 1995, when the Russians agreed to build it for Iran, and was supposed to be completed by 1999. In theory, aside from some simple -- if essential -- component installation, the facility has been ready since 2004. Now, pushing three years later, the project remains a white elephant, and the Russians are claiming the Iranians are not paying for their services.

The nuclear card has been among Iran's most reliable means of drawing Washington's attention and pushing the Americans to take Tehran's concerns over the future of Iraq seriously, so Putin's announcement has delivered the Iranians a strong blow. If a junior minister or representative of a state firm were to insist that a bogus payment problem existed, it easily could be written off as bureaucratic stubbornness or the payment getting lost in the mail. Not so when a president -- particularly one as sober, controlling and exacting as Putin -- puts his personal seal on the policy. Bushehr is not going to be finished.

This does not eliminate Iran's nuclear card. Tehran still has its uranium conversion program at Isfahan, its uranium enrichment program at Natanz, and a heavy-water reactor under construction at Arak, but these facilities are not under regular international inspections, and moreover have direct uses in a nuclear weapons program. (Though uranium power reactors such as Bushehr can be used in a weapons program, they require extensive additional support infrastructure first.) It is far more difficult to convince the West -- and especially the Europeans, who are less inclined to view Iranian plans as nefarious -- that these facilities are all for the peaceful development of nuclear energy when one's power plant is not getting off the ground.

Ultimately, it is all political. Russia uses Bushehr as a means of injecting its influence into the Middle East, positioning itself as an impossible-to-ignore go-between for the West and Iran. So long as the facility is under construction, Moscow has maximized its leverage with all parties.

Should the facility ever come on line, however, Moscow will lose hugely. First, the West would be furious with Russia for giving Iran functional nuclear technology, severely damaging Russian relations with the West. Second, with Bushehr operational, neither the West nor Iran would need to keep talking to Russia about the Iranian nuclear power program. Third, Iran is not a natural Russian ally. The two have fought in a number of wars and actively compete for influence in Azerbaijan and Turkmenistan. A nuclear-armed Iran is actually more of a long-term threat to Russia than it is to the United States, which a strategist like Putin knows well.

Not even in the case of a breach in U.S.-Russian relations -- and those relations are not exactly in tip-top shape -- will Putin change this policy. There is only one conceivable policy evolution in Russia that would allow Iran access to Russian nuclear technology: regime change that saw the ejection of Putin and his inner circle of pragmatists in favor of Russia's siloviki.

The siloviki are a loosely aligned group of Russian nationalists and ultranationalists who dominate the country's military, intelligence and foreign policy apparatus and share the goal of resurrecting Russia as a great power. One of the siloviki's most glaring weaknesses is that they consider anything bad for the United States by definition good for Russia. Many siloviki have declared their support for proliferating nuclear technology far and wide in order to complicate U.S. efforts globally.

Under a siloviki government, therefore, Russia might actually give Iran what it needs to make Bushehr operational -- and perhaps even more -- but not until then.

We stand at a historic crossroads. Disregarding Security Council decisions, Iran's rulers are stepping up their nuclear programme. Will Europe continue soft-soaping the Mullahs or will it show some resolve? Will it accept the fact that, by seeking nuclear weapons, the Iranian dictatorship is escalating its holy war at the gates of Europe? Or will it summon up the will to raise the economic price Iran must pay to a point where the regime – which is facing mounting popular discontent – has to give way?

If any power is still able to get the regime in Tehran to back off without the use of military force, then that power is the European Union. The USA can't do it because it has no trade with Iran . China, Japan and Russia can't do it either, because Iran can get along without them. But Iran needs Europe. Iran gets 40% of its imports from the EU, which in turn takes in 25% of Iranian exports.

While Japan and China are interested in Iran essentially as a source of energy supplies, Germany , Britain, Italy, the Netherlands and France provide the Iranian economy with vital investments. Trading partner number one was and is Germany; as the former President of the German-Iranian Chamber of Commerce in Tehran, Michael Tockuss, has explained, "some two thirds of Iranian industry relies on German engineering products. The Iranians are certainly dependent on German spare parts and suppliers."

Certainly dependent! The potential leverage of economic sanctions couldn't be clearer. Since then a study by the Iranian Parliament has stated the obvious: without European spare parts and industrial goods the Iranian economy would grind to a halt within a few months. If anyone is still in a position to use this lever before it is too late, then it is Germany and the EU.

Of course Europe should have done so back in 2003, when Tehran was forced to admit that it had been pursuing a secret nuclear programme for the past eighteen years. Nuclear weapons in the hands of the world's number one sponsor of terrorism? The public was alarmed. But what happened?

Prior to 2003, government-backed export guarantees had fuelled the expansion in trade by countries such as Italy, France and Austria. After the exposure of Iran's secret nuclear programme, these export guarantees were not stopped by European governments but generously increased, as we can see here in the case of Germany and Britain .

In its 2004 annual report on export guarantees, Berlin's Economics Ministry dedicated a special section to Iran that captures its giddy exitement about business with Tehran: "Federal Government export credit guarantees played a crucial role for German exports to Iran; the volume of coverage of Iranian buyers rose by a factor of almost 3,5 to some € 2,3 billion compared the previous year," the report said. "The Federal Government thus insured something like 65% of total German exports to the country. Iran lies second in the league of countries with the highest coverage in 2004, hot on the heels of China."

British trade with Iran is relatively small in comparison to Germany. Between 2003 and 2005 Germany's export to Iran was about five times larger than exports from British firms. The governmental policies of both countries, however, are quite similar. In Britain , there is a separate government department, the "Export Credits Guarantee Department" or ECGD that reports to the Secretary of State for Trade and Industry and derives its powers from the "Export and Investment Guarantees Act 1991". According to the ECGD's annual list of guarantees the British export credit guarantees for business with Iran rose by a factor of 2,6 - from 30 Million pounds in 2003 to an amazingly 77 Million pounds in 2004.

Is this boosting of business with Iran compatible with the ECGD's declared goal "to ensure its activities with other Government objectives including those on sustainable development, human rights, good governance and trade"? Not at all.

Instead this policy was and is a stab in the back for Iranian human rights groups, since there can be no question here of "change through trade". On the contrary. Three quarters of all Iranian industrial firms are in state hands. The export deals are not being struck with the private sector, but with the regime's "Revolutionary Foundations" such as the "Martyrs Foundations" run by Islamist hardliners. These "little kings", as they are known in Iran, are personally appointed by the revolutionary leadership and Parliament has no control over them. Most are or have been involved in terrorism or weapons of mass destruction programmes.

European export support bolsters the Mullahs' nuclear ambitions in three ways. Firstly, a proportion of any money lent to the regime is spent on nuclear research. Secondly, every export deal strengthens the internal position of the hardliners, who are invariably hardliners on the nuclear issue too. Thirdly, the country is getting state-of-the-art technology of a sort that can be used in the nuclear sphere. For example, in August 2003 Siemens – a firm with expertise in the field of nuclear power station construction – signed a contract for the delivery of 24 power stations. To make this deal, Siemens had to commit itself to "technology transfer with regard to small and medium-sized power stations".

2005 marked a further watershed. Now, a hardliner had become President. Ahmadinejad's tirades about Israel, the Holocaust and the Twelfth Iman shed a harsh new light on the special threat presented by Iran's nuclear programme. This was not only a good opportunity, but also a truly compelling reason for a change of export policy towards Iran. Indeed, the OECD raised Iran's rating of the risk regarding possible export guarantees. Exports became more expensive and the mood among exporters worsened. Nevertheless, in 2006 German exports to Iran fell only by 6%. Last year German exports worth € 4.1 billion, made its way to Iran. Austria and Germany – despite the Holocaust denial and threats to annihilate Israel –continued to promote exports as if nothing had happened. In 2006, some 20% of all German export credit guarantees were still being devoted to business with Iran. In Britain , the last ECGD annual report of 2006 shows that here the third largest liability was decided in favour of business with Iran.

The real pan-European support for Iran , however, including the UK, relates to the Nabucco project for a giant pipeline running directly from the Iranian gas fields to the city of Baumgarten in Lower Austria . The final decision on this project is to be made at the end of this year. If this pipeline is built, the relationship between Europe and the Mullahs would change. In this case Iran 's Islamist regime would become Europe's new strategic partner.

It was precisely in February 2006, as the Iranian president's tirades reached their height, that the European Investment Bank decided to put a billion dollars into this project. However, this Bank is an EU body. It gets its capital from the EU member states including the UK. As the EU's financial instrument, it is obliged to pursue the EU's political goals. Propping up the economy of a regime that publicly hangs young women and men for their sexual relationships can hardly count as one of the EU's political goals. Was there ever a public debate or a parliamentary debate in this country about the Nabucco and its long-term effects?

Today, in 2007, Iran is on the verge of being able to produce enriched uranium on an industrial scale. But Europe continues to oppose the establishment of an effective sanctions regime by a "coalition of the willing" going beyond the limits of the Security Council resolutions. On the contrary, three weeks ago, the German government declared, that also today it grants new Hermes export credit guarantees for trade with Iran. The British governmental organisation "UK Trade & Investment", undauntedly beats the drum for more trade with Iran as well: "Iran is one of the most exciting countries in the region for business development … The main opportunity for UK business is in providing capital and equipment to Irans's priority sectors: Oil, gas and petrochemicals, Mining [and] Power."

What do the turning points of 2003, 2005 and 2007 show us? They show the stubbornness with which business and political leaders constantly follow the same paradigm: Iran's nuclear ambitions are treated as a negligible quantity, with "business as usual" taking priority. They act as if it is a matter of secondary importance from the point of view of European interests whether Iran has nuclear weapons or not and are taking their distance from those advocating sanctions. They seem to have fallen prey to the illusion that a nuclear Iran would have no impact on Europe. But there could be no bigger mistake. An Iran with nuclear weapons would be a nightmare not only for Israel, but also for Europe itself.

If Iran were to develop nuclear weapons, the whole of the Middle East would go nuclear too – whether because the Iranian regime would fulfil its promise to pass the technology on to its friends or because the Arab regimes would seek their own nuclear capability in Iran's wake. The specific danger presented by the Iranian bomb, however, stems from the unique ideological atmosphere surrounding it - a mixture of death-wish and weapons-grade uranium, of Holocaust denial and High-Tec, of fantasies of world domination and missile research, of Shiite messianism and plutonium. There are other dictatorships in the world. But in Iran the fantasy-worlds of antisemitism and religious mission are linked with technological megalomania and the physics of mass destruction. For the first time we face a danger that first appeared on the horizon 70 years ago: a kind of "Adolf Hitler" with nuclear weapons.

Does anyone here really believe that Europe would be hardly affected by this? As Angela Merkel informed us recently, "We must take the Iranian President's rhetoric seriously". Quite right! Ahmadinejad is gleefully contemplating the end of liberal democracy as a whole: "Those with insights can already hear the sounds of the shattering and fall of the ideology and thoughts of the liberal democratic systems", as he wrote in a letter to President Bush, reiterating the shared view of the entire theocratic elite. He sees himself and his country as being in the midst of a "historical war that has been underway for hundreds of years" and drums into the heads of his followers that "we must make ourselves aware of the baseness of our enemy, such that our holy hatred will spread ever further like a wave." In order to win this war, the Shahab 5 medium-range missile, which can carry nuclear warheads and strike almost any target in Europe, is being built. In order to win this war, thousands of suicide bombers have been recruited and Hezbollah cells established throughout Europe – cells whose members are under the direct command of the Iranian secret services.

Europe will at once find itself in a new situation if Iran gets the bomb. Whether or not Iran formally declares itself to be a nuclear power is secondary. In the same way as the death sentence on British author Salman Rushdie succeeded in striking fear into thousands of hearts, so will Iran's nuclear option serve to torpedo any prospect of peace in the Middle East and keep Europe in line.

Something has to happen to prevent this scenario from becoming a reality. Which brings me back to the final remaining non-military resort in the conflict with Iran: tough sanctions.

Of course, even outside America there are firms that are behaving responsibly, firms about which it could be said that, even if they perhaps don't always engage in "fair trade", they are at least committed to "terror-free trade", firms that have either totally ceased involvement in Iran or reduced their activities to a minimum. Among them are the Swiss banks UBS and Credit Suisse, British Petroleum and the Allianz. They no longer want to get their hands dirty.

But then there is the far longer list of firms that want to do business with the jihadists in Tehran, albeit in increasing secrecy, since they wish to keep their partnership with the Iranian regime out of the public eye. Among them are giants like BASF, Henkel, Continental, Bahlsen, Krupp, Linde, Lurgi, Siemens, ZF Freidrichshafen, Mercedes, Volkswagen, Scania, Volvo, MAN, Shell, Total, Hansa Chemie, Hoechst, OMV, Renault and SAS as well as smaller firms such as Stahlbau Schauenberg , Schernier and Wolf Thermo-Module. From now on we should call such firms what they are: silent partners in terrorism.

Tehran is purposely driving on towards nuclear weapons. Time is at a premium. The security environment for the twenty-first century is being decided right now. Tomorrow, will we already be living in the shadow of the Iranian bomb? Or can the international community still stop Ahmadinejad and his regime?

If respect for the victims of the Holocaust still counts for anything in Europe today, then any firm that does business with the antisemitic regime – a regime that promotes suicide terrorism, finances Hezbollah and has explicitly stated its goal of destroying Israel - must be exposed and denounced. If continental Europe's civil societies wish to make good on their claim that they have learned the lessons of history, then pressure must be exerted on their Governments until they do what has to be done to prevent the Iranian bomb. If Great Britain and the EU fail to put prompt and massive pressure on Iran and confront it with the alternative of either changing course or suffering devastating economic blows, all that will remain will be the choice between a bad solution – the military option – and a dreadful one – the Iranian bomb.

Europe must cease to be the sleeping partners of terrorism. We must put a stop to the international competition to see who can make the dirtiest deal in Iran. We must break with an approach that is leading with businesslike efficiency towards catastrophe.

The matter of the anti-aircraft missiles that they have sent/will send? seems to have fallen off the radar screen. Does anyone know the current status of this matter?

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Russia Gives Iran Ultimatum on Enrichment

By ELAINE SCIOLINOPublished: March 20, 2007

PARIS, March 19 — Russia has informed Iran that it will withhold nuclear fuel for Iran’s nearly completed Bushehr power plant unless Iran suspends its uranium enrichment as demanded by the United Nations Security Council, European, American and Iranian officials say.

The ultimatum was delivered in Moscow last week by Igor S. Ivanov, the secretary of the Russian National Security Council, to Ali Hosseini Tash, Iran’s deputy chief nuclear negotiator, said the officials, who spoke on condition of anonymity because a confidential diplomatic exchange between two governments was involved.

For years, President Bush has been pressing President Vladimir V. Putin of Russia to cut off help to Iran on the nuclear power plant that Russia is building at Bushehr, in southern Iran. But Mr. Putin has resisted. The project is Tehran’s first serious effort to produce nuclear energy and has been very profitable for Russia.

Recently, however, Moscow and Tehran have been engaged in a public argument about whether Iran has paid its bills, which may explain Russia’s apparent shift. But the ultimatum may also reflect an increasing displeasure and frustration on Moscow’s part with Iran over its refusal to stop enriching uranium at its vast facility at Natanz.

“We’re not sure what mix of commercial and political motives are at play here,” one senior Bush administration official said in Washington. “But clearly the Russians and the Iranians are getting on each other’s nerves — and that’s not all bad.”

A senior European official said: “We consider this a very important decision by the Russians. It shows that our disagreements with the Russians about the dangers of Iran’s nuclear program are tactical. Fundamentally, the Russians don’t want a nuclear Iran.”

At a time of growing tensions between Washington and Moscow, American officials are welcoming Russian support on the situation with Iran as a sign that there are still areas in which the two powers can cooperate.

Russia has been deeply reluctant to ratchet up sanctions against Iran in the Security Council, which is expected to vote on a new set of penalties against the country within the next week.

But American officials have been trying to create a commercial incentive for Russia to put pressure on Iran. One proposal the Bush administration has endorsed since late 2005 envisions having the Russians enrich Iran’s uranium in Russia. That creates the prospect of tens or hundreds of millions of dollars in business for Russia, and a way to ensure that Iran receives only uranium enriched for use in power reactors, instead of for use in weapons.

Iran has rejected those proposals, saying it has the right to enrich uranium on its own territory.

The Russian Atomic Energy Agency, or Rosatom, is eager to become a major player in the global nuclear energy market. As Security Council action against Iran has gained momentum and Iran’s isolation increases, involvement with the Bushehr project may detract from Rosatom’s reputation.

In a flurry of public comments in the past month, Russian officials acknowledged that Russia was delaying the delivery of fuel to the reactor in the Iranian port city of Bushehr. It blamed the decision on the failure of Iran to pay what it owes on the project, not on concerns about nuclear proliferation.

But last month, Foreign Minister Sergey V. Lavrov informed some European officials that Russia had made a political decision not to deliver the fuel, adding that Russia would state publicly that the sole reason was financial, European officials said.

And then last week, a senior Iranian official confirmed in an interview that Mr. Ivanov had threatened Iran with an ultimatum: The fuel would be delivered only after Iran’s enrichment of uranium at Natanz was frozen.

Members of the Security Council are moving toward a vote this week on a draft resolution imposing further sanctions on Iran for its defiance of demands that it suspend enrichment activities and return to negotiations over its nuclear program.

The resolution focuses on the country’s arms exports, a leading Iranian bank and the elite Revolutionary Guards military force. It will reduce Iran’s access to foreign currency and isolate the bank, Bank Sepah, from international financing.

The United States State Department has granted visas to President Mahmoud Ahmadinejad of Iran and a retinue of 38 aides and security staff so that he can address the Security Council meeting.---------

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Throughout the negotiations, the Russians tried to water down the resolution, a reflection of both their desire to avoid a backlash in Iran and their strong skepticism about the effectiveness of sanctions.

The pending resolution follows a similar one passed in December that required four months of negotiations, in large part because of Russia’s resistance. Russia’s support came only after an initial proposal, which would have imposed curbs on Bushehr, was dropped.

Russian officials have gone out of their way to not publicly link the Bushehr project and the crisis over Iran’s decision to forge ahead with producing enriched uranium, which, depending on the level of enrichment, can be used to produce electricity or make weapons.

In remarks on Sunday, for example, Mr. Ivanov said there should be no linkage between discussions on Iran’s nuclear program and the Bushehr plant. “It is a separate issue,” he told a conference of Russia’s Foreign and Defense Policies Council. He added, “All the work being done is under strict control of the International Atomic Energy Agency,” the United Nations’ nuclear watchdog agency based in Vienna.

He also cautioned against using possible nuclear sanctions for other purposes, saying, “We oppose attempts to use this issue as an instrument of pressure or interference in Iran’s internal affairs.”

But Mr. Ivanov also called on Iran to resolve outstanding questions with the agency about its nuclear program and to stop enriching uranium. The Russians have been pressing Iran to take some sort of pause in its uranium enrichment that might allow the Security Council sanction process to halt and bring Iran back to the negotiating table.

“The clock must be stopped; Iran must freeze uranium enrichment,” Mr. Ivanov said. “The U.N. Security Council will then take a break, too, and the parties would gather at the negotiating table.”

The head of the International Atomic Energy Agency, Mohamed ElBaradei, has also called for a “pause,” noting that even a brief suspension of enrichment would be enough to get the United States to the negotiating table with Iran under an offer that Secretary of State Condoleezza Rice made in May.

The Bushehr nuclear project has a long history. For more than a decade, Russia has been working under a $1 billion contract to complete the plant, which began with Germany during the time of Shah Mohammed Reza Pahlavi. After the 1979 revolution, the project was halted; then the site was bombed by Iraq during its eight-year war with Iran. When Iran decided to complete the facility after the war ended, Germany, under pressure from the United States, refused to finish it, or even provide Moscow with the original blueprints.

The project — already eight years behind schedule — is now almost complete. Last year, Russia agreed to ship low-enriched fuel to the plant by March 2007 and start it in September, with electricity generation to start by November.

But in mid-February, Russia said Iran had not made the last two $25 million monthly payments after insisting that it be allowed to pay in euros instead of dollars. Russian officials cited a delay in the delivery of safety equipment from an unspecified third country as another reason for the decision.

Iranian officials denied that payments had been delayed. “Iran has had no delay whatsoever in making payments for the Bushehr nuclear power plant,” Mohammad Saeedi, deputy head of the Atomic Energy Organization of Iran, was quoted by Iran’s state-run news agency IRNA as saying after the Russian claim.

“We would be crazy at this late date to endanger the project by not paying,” the official said. “There is no financial problem. The Russians want to use this issue as a bargaining chip.”

The capture of British Navy servicemen by Iranian forces is not simply an incident over sea sovereignty in the Persian Gulf. It is a calculated move on behalf of Teheran’s Jihadi chess players to provoke a “projected” counter move by London and its American allies. It is all happening in a regional context, carefully engineered by the Mullahs strategic planners. Here is how:The Iranian regime’s master plan is to wait out the remainder of Tony Blair’s mandate (few more months) and the remaining “real time” of President Bush (till about the end of 2007). For the thinking process in Tehran, based on their Western consultants, believe that Washington and London have reached the end of the rope and will only have till 2008 to do something major to destabilize Ahmedinijad regime. As explained by a notorious propagandist on al Jazeera today the move is precisely to respond to the Anglo-American attempt to “stir trouble” inside Iran. Anis Naccash, a Lebanese intellectual supporter of the Ayatollahs regime, appearing from Tehran few hours ago on the Qatari-based satellite and “explained” that the “US and the UK must understand that Iran is as much at war with these two powers in as much as they support the rise of movements and security instability inside Iran.” He added that Khamenei is clear on the regime’s decision to strike: “we will be at war with you on all levels: secret, diplomatic, military and other.” Pro-Iranian propagandists in the region, via media and online rushed to warn that this movement is part of Iran’s counter-strike against any attempt to destabilize the regime. Two major tracks emerge from these statements, the Iranian military maneuvers and the capture of British Navy personnel. 1) Iran’s domestic front is putting pressure on the Ahmedinijad regime.From internal reporting, dissidents and anti-Ahmedinijad forces from various social sectors are practically in slow motion eruption against the authorities. Students, women, workers and political activists have been demonstrating and sometimes clashing with the regime’s security apparatus. Western media didn’t report proportionally on these events over the past few weeks. In addition, ethnic minority areas have been witnessing several incidents, including violence against the “Revolutionary Guards,” including in the Arab and Baluch areas. And last but not least, the defection of a major intelligence-military figure early this month to the West was, according to internal sources, a “massive loss” to the regime and a possible first one in a series. 2) The regime “need” an external clash to crush the domestic challenge.As in many comparable cases worldwide, when an authoritarian regime is faced with severe internal opposition it attempts to deflect the crisis onto the outside world. Hence, Teheran’s all out campaign against the US and its allies in Iraq, Lebanon and the region is in fact a repositioning of Iran’s shield against the expected rising opposition inside the country. Hence the Khomeinist Mullahs plan seem to be projected as follow:a. Engage in the diplomatic realm, to project a realist approach worldwide, but refrain from offering real resultsb. Continue, along with the Syrian regime, in supporting the “Jihadi” Terror operations (including sectarian ones) inside Iraqc. Widen the propaganda campaign against the US and its allies via a number of PR companies within the West, to portray Iran as “a victim” of an “upcoming war provoked by the US.”d. Engage in skirmishes in the Gulf (and possibly in other spots) with US and British elements claiming these action as “defensive,” while planned thoroughly ahead of time. 3) The regime plan is to drag its opponents into a trapTeheran’s master planners intend to drag the “Coalition” into steps in engagement, at the timing of and in the field of control of Iran’s apparatus. Multiple options and scenarios are projected.a. British military counter measure takes place, supported by the US. Iran’s regime believe that only “limited” action by the allies is possible, according to their analysis of the domestic constraints inside the two powerful democracies.b. Tehran moves to a second wave of activities, at its own pace, hoping to draw a higher level of classical counter strikes by US and UK forces. The dosing by Iran’s leadership is expected to stretch the game in time, until the departure of Blair and of the Bush Administration by its political opponents inside the country’s institutions and public debate.In a short conclusion the “War room” in Tehran has engaged itself in an alley of tactical moves it feels it can control. But the Iranian regime, with all its “political chess” expertise, may find itself in a precarious and risky situation. For while it feel that it can control the tactical battlefield in the region and fuel the propaganda pressure inside the West with its Petro-dollars, it may not be able to contain the internal forces in Iran, because of which it has decided to go on offense.The Ahmedinijad regime wishes to crumble the international consensus to avoid the financial sanctions: that is true. But as important, if not more, it wants to be able to crush the revolt before it pounds the doors to the Mullahs palaces.Dr Walid Phares is a Senior Fellow with the Foundation for the Defense of Democracies in Washington. Author of the newly released The War of Ideas: Jihadism Against Democracy www.thewarofideas.net

The article makes sense. Iran has now taken the Brits as hostages. The Brits mistake was allowing this vessel to be taken to start with.

Perhaps Iran has calculated that the timid US will spend the rest of Bush's and Blair's tenures negotiating the hostages release. AFter '08 they know the Dems will do nothing while they continue on with their nuclear goals. As far as I can tell only W. has the guts to stand up to them. But he doesn't have the political support. And with an election coming up he won't get it.

UNITED NATIONS, March 24 — The United Nations Security Council unanimously agreed Saturday to impose new, more stringent sanctions to press Iran to suspend uranium enrichment and rejoin negotiations over its nuclear program.

All 15 members of the Security Council adopted the sanctions, Resolution 1747, which focus on constraining Iranian arms exports, the state-owned Bank Sepah — already under Treasury Department sanctions — and the Revolutionary Guard Corps, an elite military organization separate from the nation’s conventional armed forces.

No surprises were in the resolution, which modestly strengthens largely financial sanctions adopted in December in a first, limited resolution. Senior American officials hailed the new resolution as a significant international rebuke to Iran, and they predicted that the new resolution’s prohibitions on dealings with 15 individuals and 13 organizations would leave Tehran more isolated.

The Iranian representative to the session denounced the action as unlawful and unjustifiable — and vowed it would have no impact on what Tehran describes as a peaceful nuclear energy program.

The Council acted after months of increasing tensions between the United States and Iran, not only over its nuclear program, concerns that many Western and Middle Eastern countries share. The United States in recent weeks has publicly accused Iran of supplying new and powerful explosives to insurgents in Iraq.

And the Council voted one day after naval forces under the command of Revolutionary Guards seized eight British sailors and seven British marines in waters off the coast of Iraq.

In order to assure a unanimous vote that would symbolize united world opinion against Iran’s nuclear ambitions, lengthy negotiations continued through Friday on a series of amendments from three of the Security Council’s nonpermanent members, South Africa, Indonesia and Qatar. Their votes were seen as particularly important, because South Africa is a leader of the nonaligned movement, Indonesia is the world’s most populous Muslim nation and Qatar is a Gulf neighbor of Iran.

The Security Council representatives of those three nations each expressed deep concerns about the final language of the sanctions resolution, but eventually cast yes votes.

The sanctions package approved Saturday, American officials said, was devised to do more than simply punish Iran for its nuclear program, as was the more limited goal of the sanctions vote in December. The new language was written to rein in what they see as Tehran’s ambitions to become the dominant military power in the Persian Gulf and across the broader Middle East.

“We are trying to force a change in the actions and behavior of the Iranian government,” said R. Nicholas Burns, under secretary of state for political affairs. “And so the sanctions are immediately focused on the nuclear weapons research program, but we also are trying to limit the ability of Iran to be a disruptive and violent factor in Middle East politics.”

The resolution calls for freezing the overseas assets of the 15 Iranian citizens and 13 organizations, some involved in the nation’s nuclear programs and missile development efforts and some associated with the Revolutionary Guard.

That corps and a subordinate military unit, the Quds Force, are not directly involved in Iran’s nuclear program. But the United States and Israel say they have supplied small arms and rockets to Hezbollah and Hamas, labeled by the State Department as terrorist organizations.

American intelligence officers also say they have indications that the guard is linked to new and more powerful improvised explosives planted by insurgent groups in Iraq against American and coalition forces there. “If we can begin to limit the Quds Force, which has been supplying enhanced explosive technology to Iraq that has been used to kill our soldiers, that is a significant step for us,” Mr. Burns said in a telephone interview after the vote.

The new resolution prohibits the sale or transfer of Iranian weapons to any nation or organization, and calls on the nations of the world to “exercise vigilance and restraint” in exporting weapons to Iran. The measure invokes Chapter 7, Article 41, of the United Nations charter, rendering most of the provisions mandatory, but excluding military action to enforce them.

The sanction on Iran’s fourth-largest bank was written to halt its use as a conduit for money supporting Iran’s nuclear program.=============

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One decidedly weaker sanctions category in the new resolution calls on, but does not require, nations and international organizations not to enter into new commitments for export credits, grants or loans to Iran except in the case of humanitarian or development projects.

The measure asks the International Atomic Energy Agency to report back within 60 days on whether Iran has suspended its efforts at enriching uranium. If it says Iran has not, further sanctions may be considered. If the agency says Iran has complied, sanctions will be suspended.

The Iranian seat at the horseshoe-shaped table was filled by Foreign Minister Manouchehr Mottaki. The seat had been reserved for Iran’s president, Mahmoud Ahmadinejad, but on Friday Iranian officials ignited an exchange of recriminations, saying that the president’s trip had been scuttled by tardy action from the United States government in issuing the visas.

In reply, a State Department spokesman, Tom Casey, said the United States Embassy in Bern, Switzerland, which handles visas for Iranians, had issued all of the required documents by early Friday and in ample time for the visit. It was not possible to independently verify either position.

After the vote, the Iranian foreign minister made a long and defiant rebuttal to the Security Council, dismissing the sanctions as “unlawful, unnecessary and unjustifiable” and said they would have no effect.

“Iran does not seek confrontation nor does it want anything beyond its inalienable rights,” Mr. Mottaki said. “I can assure you that pressure and intimidation will not change Iranian policy.”

He said that suspension of the Iranian nuclear program “is neither an option nor a solution,” and that it was “a gross violation” of the United Nations charter to use sanctions in an effort to halt what he contended was a peaceful nuclear energy program.

The resolution included amended language that stressed the importance of a nuclear-free zone in the Middle East — without reference to Israel, a close American ally widely believed to have nuclear weapons — and emphasized the importance of the role played by the International Atomic Energy Agency in nonproliferation efforts and safeguarding nuclear materials.

The diplomatic row over the Iranian seizure of 15 British servicemen and marines entered its fourth day Monday, with Iran saying the Britons are "fit and well" and being held at a secret location until the Iranians can determine through interrogation whether their alleged entry into Iranian waters was intentional.

The U.S. and British governments say the British personnel were intercepted by the Islamic Revolutionary Guard Corps' (IRGC) naval forces March 23 after completing a search of a civilian vessel on the Iraqi side of the 120-mile Shatt al-Arab waterway leading to the Persian Gulf. The Iranian government, however, says the British servicemen admitted to illegally entering Iranian territory, and that it has the satellite tracking images to prove the "blatant aggression into Iranian territorial waters."

Iran has a track record of stirring up diplomatic spats in the oil-rich Persian Gulf in order to reassert its political and military relevance, as it did in June 2004 when it seized three British patrol boats in the Shatt al-Arab. At that time, the Iranian nuclear controversy was gaining steam as Washington attempted to transfer the issue to the U.N. Security Council while building a new government in Baghdad without consulting Iran.

This latest incident occurred a day ahead of the widely expected unanimous U.N. Security Council vote to tighten sanctions against Iran. Included in the resolution is a clause freezing the assets of 28 people and organizations ostensibly involved in Iran's nuclear and missile programs. Many of them belong to the elite IRGC and Quds Force (a paramilitary arm of the IRGC), which have been heavily involved in fueling the Iraq insurgency. The IRGC is evidently displeased with the financial hit, as well as the January seizure of five Iranians -- including IRGC and Quds Force members -- in a U.S. raid in Arbil. IRGC weekly newspaper Subhi Sadek expressed this outrage, saying the IRGC has "the ability to capture a bunch of blue-eyed, blond-haired officers and feed them to our fighting cocks."

There are a number of reasons behind the IRGC's recent seizure of the British servicemen, but there could be more to this diplomatic row than is apparent.

While Iran and the United States have kept the media busy with diplomatic maneuverings over Iraq and threats linked to the Iranian nuclear program, Iran has been entangled in an intense covert intelligence war with the West. As part of this fight, the assassination of an Iranian nuclear scientist by Israel's Mossad was met a few weeks later -- as expected -- with a retaliatory strike in Paris against David Dahan, head of the Israeli Defense Ministry Mission to Europe. Though Dahan's death was treated as a suicide, intelligence suggests Dahan was singled out by the Iranian Ministry of Intelligence and Security (MOIS) in a tit-for-tat strike.

Several weeks ago, Ali Reza Asghari, a former Iranian deputy defense minister and Pasdaran commander defected while traveling in Turkey and was turned over to the U.S. government. Asghari is undoubtedly a valuable asset for Western intelligence agencies, who likely hope to use him to dissect the Iranian defense establishment -- representing a significant threat to Iran's national security. In the course of Asghari's debriefing, he undoubtedly was grilled on his knowledge of any suspected U.S. agents operating in Iran in order to determine if any agents have been or are close to being exposed by Iranian security agencies.

With this in mind, there have been recent indications from U.S. and Israeli intelligence sources that the British MI6 was engaged in an operation to extract one of its agents from Iran, but a leak tipped MOIS off to the plan. According to an unconfirmed source, the IRGC nabbed the British personnel, as well as the agent, to use as a bargaining chip in order to secure the release of the five detained Iranians. If these negotiations go poorly for Iran, the Britons could very well be tried for espionage.

The motive behind the seizure of the British servicemen is still unclear, but the operation likely was planned well in advance by key figures within the IRGC. At this point, the Iranians are watching their backs closely, and are willing to take the political risk of flaring up another diplomatic dispute in order to plug further intelligence leaks.

Total Recall A French oil giant's deals with a rogue regime--this time in Iran.

Thursday, March 29, 2007 12:01 a.m. EDT

Don't stop us if you've heard this one: French oil giant Total SA is being investigated for illicit dealings with a rogue regime in the Middle East. This time it's Iran, but maybe you recall its experience with another dictator and something called Oil for Food.

A French judge is investigating bribes that Total executives allegedly paid Iranian officials to secure business in the Islamic Republic. Last week, the judge issued preliminary charges of abuse of company funds and corruption of foreign agents against Chief Executive Christophe de Margerie. The company and Mr. de Margerie deny any wrongdoing, but the Total experience is all too typical of the way European firms cut deals with dictators while their own governments provide political cover.

Meanwhile, the same French prosecutor continues to investigate Total for alleged kickbacks paid to Saddam Hussein in return for Iraqi oil. In his report on Oil for Food corruption, former Federal Reserve Chairman Paul Volcker found that Total, through intermediaries, had purchased some of the 11 million barrels of oil that former Iraqi officials claim was allocated to French Senator Charles Pasqua in thanks for his support of Saddam's Iraq. Total and Mr. Pasqua also deny any wrongdoing.

However the probes play out, Total's business with Tehran is probably a violation of the U.S. 1996 Iran-Libya Sanctions Act. The Clinton Administration thought so as far back as early 1998, when crude oil futures were selling for a quarter of the current price, and Tehran was desperate for cash to finance Hezbollah and, as we later learned, its nuclear program."We believe that transactions that substantially enhance Iran's ability to acquire the revenues necessary to acquire missile technology and weapons of mass destruction should not be in any way made easier," Defense Secretary William Cohen argued at the time. Secretary of State Madeleine Albright was even more blunt: "As far as the French are concerned, I must say it passes my understanding why there is no realization that pumping money into the system of Iran is not helpful to the rest of us."

But after French carping and trade threats by the European Union, President Clinton waived sanctions on Total, Russia's Gazprom and Malaysia's Petronas for the $2 billion natural-gas deal they had inked with the mullahs in 1997. That waiver set an informal precedent, as both the Clinton and Bush Administrations have stayed silent as companies from Italy, Canada, the Netherlands, Britain, Norway, Sweden, South Korea and Japan have signed energy deals with Iran worth some $11.5 billion, as the nearby table shows.

That patience may be ending now that Iran is kidnapping British sailors, supplying bombs that kill Americans in Iraq, and defying U.N. orders to stop enriching uranium. The Bush Administration is pressing financial sanctions against Iran especially hard, but pressure is building on Capitol Hill for firmer action. Democratic Senator Frank Lautenberg is talking about more severe penalties for U.S. firms that do business with states that sponsor terrorism, and stricter sanctions on the U.S. interests of foreign companies could be in the cards as well.

We've always thought sanctions are a blunt instrument, and they can backfire when used on the wrong target. It's also true that U.S. sanctions wouldn't hurt Total in the short term; the Iran-Libya Sanctions Act is limited to penalties for companies' U.S. businesses, and the bulk of Total's activities are in Europe and Latin America. But against a regime such as Iran's--which is now the biggest threat to world security--sanctions are also a form of diplomatic pressure short of the military action that European governments claim to want to avoid at all costs. Total executives and European politicians are fooling themselves if they think U.S. pressure for action against Iran will stop once the Bush Administration leaves power.There's some debate in France about why prosecutors are suddenly showing so much interest in what is by now a 10-year-old case. Perhaps allies of Jacques Chirac have less political cover as his presidency winds down, or maybe big companies are no longer seen as untouchable on the Continent after a series of corporate scandals. Or it could be that investigative judge Philippe Courroye is anxious to close out his current docket before his scheduled transfer to another court. Whatever the reason, it's good to see someone in Paris take corrupt dealings with dictators seriously.

In Iraq 10 years ago, Total and its political protectors canoodled with Saddam and propped him up until the U.S. decided it had no choice but to act against him. Europe shouldn't make the same mistake in Iran.

President Reagan once famously quipped that his strategy in confronting the Soviet Union was "We win, they lose." Today, we need a similarly clear strategy to confront Iran, if we are to successfully counter its aim to drive the U.S. from the Middle East and -- as we see with the 15 British sailors the Iranians have taken hostage -- attempts to intimidate Western powers into inaction.

That strategy begins not with the Kabuki dance now underway at the United Nations. Turtle Bay is usually, and seems destined to be again in this case, a diplomatic sideshow meant more to distract us than to disarm a rogue regime.

While we dither the Iranians will acquire nuclear weapons, give support to our enemies in Iraq and undermine our credibility with our European allies. We need to demonstrate now that there are viable military options in dealing with a rogue regime in Tehran and that not all of those options will leave us embroiled in a shooting war with yet another large, sprawling nation in the Middle East.

I believe that our options for dealing with Iran are more numerous and could be more productive than many Washington policy makers have heretofore argued. Let us remember that Iran is a very diverse nation whose population is only 51% Persian. The rest is Azari (24%), Kurdish (10%) and a mix of other ethnic minorities including Turkman, Arab and others. This is a rich environment for unrest and one reason why there were an estimated 4,300 protest demonstrations in 2005 alone. In recent weeks, we may have benefited from another form of protest. Former Iranian deputy defense minister Ali Reza Asgari appears to have used a trip to Turkey to defect with his family. If he is now talking to Western intelligence officials, we'll soon know a lot more about the inner workings of the Iranian regime.

And the Middle East itself is no monolithic bloc of support for Iranian President Mahmoud Ahmadinejad. Israel, of course, is a natural ally in gaining intelligence and lining up support against the Iranian regime. But Iran is bent on destabilizing and dominating the Arabian Peninsula from Lebanon through Gaza into Iraq with a stopover in Bahrain. That makes Saudi Arabia as well as Jordan potentially strong -- if not overt -- allies in countering Iranian influence. The situation has gotten so serious that King Abdullah of Jordan called it a Shia crescent sweeping across the Arabian Peninsula and King Abdullah of Saudi Arabia summoned Vice President Cheney to Riyadh last fall.

If we demonstrate that we are sufficiently serious in countering Iran, we could form a coalition of the willing with Saudi Arabia, Jordan, Egypt, the Gulf States, Turkey, Australia and those European allies with the courage to consider what their future will look like with a nuclear-armed Iran within missile range. No more denial or hoping Iran will negotiate their nuclear weapons development away. The criteria for joining this coalition would be to join in making the following demands of Iran: Stop developing fissile material, submit to unambiguous International Atomic Energy Agency inspections, turn over all al Qaeda operatives within your borders and stop supporting Hezbollah.

The hard part, of course, of forming any meaningful coalition is the consequences of noncompliance. And this case is no different. The obvious punishment for a defiant Iran could be an air strike that aims to destroy its nuclear development facilities and overt support for Iranians working to overthrow their government. This is where the discussion of taking stringent actions against Iran usually breaks down. Few people believe Saudi Arabia and other Middle Eastern nations would join a coalition that carried out a military strike and there is little reason to believe many European nations would either.

This is where President Reagan in confronting the Soviets is instructive. The Gipper was elected in 1980 at a time when it appeared inevitable that the Soviet Union would dominate world affairs and just as inevitably that the U.S. was unable to do anything about it short of waging a bloody, military campaign that would have few allies in fighting and not every chance of success. In the end, as they say, Reagan won the Cold War without firing a shot.

We have similar options now. One of which is to enact drastic economic sanctions that, oddly, would involve forcing a gasoline crisis in Iran. Tehran is kept afloat on oil revenues, but it has done so at the expense of its oil industry. While it exports large quantities of crude oil, Iran imports 40% of its domestically consumed gasoline, and each gallon at the pump is heavily subsidized. Shutting off or even restricting the supply of gasoline flowing into the country would put the regime in a crunch and drive up public discontent without creating a corresponding humanitarian crisis.

We could also apply minimal military pressure without straining our relations with our allies. To date Iran is responsible for killing more than 200 American soldiers and wounding over 635 through the introduction of what the U.S. military calls Explosively Formed Penetrators. These EFPs are shaped charges specifically designed to pierce the hulls of our armored vehicles and are much deadlier than what al Qaeda and run-of-the-mill insurgents could have come up with on their own in Iraq. Enough is enough. We could develop a tit-for-tat strategy for each EFP that is detonated in Iraq that could target nuclear support facilities or Iranian leadership or other targets calculated to put heat on the regime without endangering civilians. Many of these responses may be written off as mere happenstance or accidents in a dangerous part of the world. But even as Iran becomes the unluckiest country in the world, our allies in the region could hardly blame us for a calculated response.

The U.S. can also assemble a large-scale force capable of an air offensive. This would serve a similar role to Reagan's military buildup, forcing the Soviets into an arms race that they ultimately couldn't maintain. The immediate strike force could be composed of some 75 stealth attack aircraft -- B2s, F117s and the F22s -- and some 250 nonstealth F15s, F16s, B52s, B1s and three carrier battle groups. These carrier battle groups are composed of over 120 F18s and cruise missiles galore. We also have over 750 UAVs for intelligence, surveillance and reconnaissance in Iraq today. There is more than enough to support a campaign aimed at demonstrating to the Iranian regime that with 48 hours we could hit its nuclear development facilities, command and control facilities, integrated air defenses, Air Force and Navy units and the Shahab 3 missiles using over 2,500 aim points.

Back in Washington, Congress also needs to exercise its responsibility and fund missile defenses, bunker busters and other technologies specifically designed to counter the Iranian regime. Tehran has the world scrambling to respond as it sets about assembling a nuclear weapon that may be more advanced than Fat Man and Little Boy, but which is still far less technologically advanced than the weapons systems we trust 20-somethings to operate every day in our military. Forcing Iran to expend its resources to keep pace with our technological advances is central to any strategy of defeating them.

We don't need to drop leaflets from the air spelling it out for the regime in Tehran that, if we were to carry out an air campaign, it would probably unleash a new Iranian revolution. But the leadership in Iran has to first come to understand that we neither fear a Hezbollah uprising over such a strike -- as Hezbollah is already carrying out terrorist attacks, we'd welcome an open fight on our terms -- nor would we need the main-line coalition ground forces we used in Iraq. Instead, we could simply use the Afghan model of precision airpower supporting covert and indigenous forces.

We're the United States of America. We don't threaten any nation. What Iran must come to realize -- and we must now decide for ourselves -- is that we are in this confrontation to win it.

Lt. Gen. McInerny is retired assistant vice chief of staff of the Air Force and Fox News military analyst.

The Islamic Republic of Iran celebrated its first national "Nuclear Technology Day" on Monday. The celebration began at 9 a.m. local time, when school bells across the country rang in unison, congratulatory text messages from the government were sent out to millions of mobile phone users, U.S. and Israeli flags went up in flames and a massive cake colored to resemble yellowcake was devoured. Iranian President Mahmoud Ahmadinejad led the festivities at the country's enrichment facility at Natanz, where he boldly announced that Iran "has joined the nuclear club of nations and can produce nuclear fuel on an industrial scale.''

Let us not forget that Ahmadinejad also announced a year ago that Iran had joined the nuclear club by running two cascades of 164 centrifuges. So, what's the news in this latest statement?

Producing nuclear fuel on an industrial scale that would place Iran well on its way to a uranium-based weapons program would involve something on the order of 3,000 defect-free centrifuges enriching to around 90 percent of the fissile isotope of uranium, up from the 3.5 percent that Iran is likely capable of in small amounts today. When asked if Iran had started injecting gas into 3,000 centrifuges being set up at the Natanz facility, National Security Chief Ali Larijani vaguely said, "Yes we have injected gas." The deputy chief of Iran's Atomic Energy Organization, Mohammad Saidi, offered a bit more clarification when he denied they had reached the 3,000-centrifuge stage and said, "We have so far been dealing with the completion of two cascades of 164 centrifuges as a pilot stage and passing this phase means industrialization of uranium enrichment." Claiming industrialization is still quite a stretch when one factors in the crude quality of Iran's centrifuges and the approximately 3,000 functional centrifuges needed for a rudimentary industrial capacity -- at the very least.

The Iranians tend to promote their nuclear program one step ahead of what they have actually achieved. That is, the nuclear announcement a year ago was likely indicative of what the Iranian scientists had achieved in a test run, and Monday's announcement is the culmination of experiments conducted over the past year that have brought Iran to a stage at which its perfected enrichment is around 3 percent to 5 percent with two cascades of 164 centrifuges -- still well below the needed threshold for a solid weapons program, much less a power program that would take dozens of times more.

Putting the techno-babble aside, it is important to examine the purpose of Iran's nuclear program in the context of the ongoing negotiations between Washington and Tehran over Iraq. Though Ahmadinejad has been talking about a big announcement since early February, it appears that the declaration of Nuclear Technology Day came at a politically convenient time for the Iranians when viewed in the context of the Iraq negotiations.

Iran and the United States are both aggressively moving to try to gain the upper hand in these talks. The Iranians played their most recent hand, the British detainee incident, quite skillfully. In what was seen as a risky maneuver, Iran in one swoop called the U.S. and British bluff that military force is a viable option against Iran, humiliated the British government through the public confessions from the detainees and, finally, demonstrated that it can effectively negotiate and deliver -- just as it could in a potential Iraq deal. Though the British detainee incident helped strengthen Iran's bargaining position, it provided Iran with only a minor advance. The United States did not waste time in making its next move with a new military offensive called Operation Black Eagle against Iran's Shiite militant allies in the town of Ad Diwaniyeh south of Baghdad, Iraq.

This is why Iran relies heavily on the nuclear card in these negotiations. When Iranian dissidents leaked details of Iran's covert nuclear program in 2002, Iran's chances of achieving full nuclear capability without facing a direct threat from Israel or the United States were severely crippled. When Washington made clear that it did not feel the need to negotiate with Iran over the future of Iraq in the spring of 2003 -- when the war was still in its early stages and the United States was still denying a Sunni insurgency existed -- Iran made the strategic decision to ratchet up the nuclear threat and utilize its militant assets throughout the region to bring Washington back to the negotiating table on Iran's terms.

Though this process is still ongoing, the United States and Iran have now reached a level in the Iraq standoff in which both sides realize they need to deal with each other to avoid their worst-case scenarios in Iraq. This mutual dependence also has given Iran the confidence that its nuclear program need not be viewed solely as a bargaining chip by the United States, and instead must become part of any deal Washington wants on Iraq. In other words, Iran is gambling that a final deal over Iraq will not require an Iranian capitulation on its nukes. Even if Iran agrees to inspections of its nuclear facilities or a cap on a certain level of enrichment, the clerical regime is likely calculating that these guarantees can be manipulated down the road for Iran to reactivate its program without much trouble.

This could be why Larijani announced on Sunday that Iran is now ready to "begin real negotiations" over its nuclear program, signaling that the Islamic Republic has reached a technological level that is advanced enough to put it on the path toward a weapons program, but not threatening enough to require pre-emptive military action -- a nice, cushy spot for negotiations.

The United States, on the other hand, is unlikely feeling pressured enough to grant the Iranians their nuclear wish. Already Washington has made an effort to separate the nuclear and Iraq issue in order to deprive Iran of one of its key bargaining tools. Washington also is not about to go against the interests of Israel, Russia and other invested parties in the dispute that do not wish to see the emergence of a nuclear-capable Iran.

Even so, Iran is making one thing very clear in this stage of the Iraq negotiations: Iranian nukes are not for sale.

1137 GMT -- RUSSIA, IRAN -- Iranian military exercises near its Bushehr nuclear power plant April 6 have raised tensions around the project, Interfax reported April 11, citing a Russian Foreign Ministry spokesman. Russia has expressed its surprise over the air defense practice and has asked Tehran to inform Russia in advance about plans to hold military exercises in the future.

A HISTORY LESSON STILL UNLEARNEDby Amir TaheriGulf News April 18, 2007With war drums beating louder, senior military commanders in Tehran miss few opportunities to warn the government against plunging the country into an unequal fight with the United States and its allies.

One such warning came last month from the Commander of the Islamic Revolutionary Guard (IRCG) General Rahim Safavi.

In an unusually frank assessment of the situation, he told an audience of guardsmen that the country lacked the necessary means to defend its extensive land and sea borders. He insisted that everything be done to avoid an "unhappy episode".

In Tehran's military circles, the phrase "unhappy episode" is a codeword for the only direct military clash that has so far taken place between the Islamic Republic and the United States.

The clash came on April 18, 1988, exactly 19 years ago today.

At the time, the Islamic Republic censored all news of the event so that most Iranians do not even know that it happened at all. For their part, the Americans also "managed" the flow of information about the clash to prevent its strategic importance from becoming apparent at the time.

Nevertheless, the clash between the navy of the Islamic Republic and a US naval task force led by the aircraft carrier USS Enterprise, was subsequently classed as one of the five naval battles of historic importance that established American sup-remacy at sea.

Clash

The background to the clash was rather complicated.

At the time, the Islamic Republic was at war against Iraq under Saddam Hussain, rejecting United Nations pleas for a ceasefire.

Towards the end of 1987, the Islamic Republic started firing on Kuwaiti oil tankers passing through the Gulf on the grounds that Arab oil money fuelled Saddam's war machine. Weeks of efforts by the UN, the Arab League, the Organisation of Islamic Conference (OIC), and the nonaligned bloc to persuade Tehran to stop attacking Kuwaiti tankers produced no results.

It was then that President Ronald Reagan decided to put the Kuwaiti tankers under the US flag and escort them through the waterway.

The Islamic Republic retaliated by mining some of the shipping lanes in the waterway. On April 14, 1988, the USS Samuel B. Roberts struck a mine and was seriously damaged. It was towed to Dubai where it arrived two days later.

The following day experts established that the mine had been made in Iran and placed by the IRCG.

Within hours, President Ronald Reagan ordered the US task force to retaliate. The IRCG responded by firing missiles at US vessels without inflicting any harm.

The US task force seized the opportunity to unleash its superior firepower to virtually break the Iranian navy.

The Americans lost two men, the crew of a helicopter that came down in an accident far from the battle.

The IRCG lost 87 men and over 300 wounded. Later, the Islamic Republic filed a suit against the US at the International Court at The Hague claiming losses amounting to several billion dollars. (The court rejected Tehran's suit in November 2003.)

The battle's effect in Tehran was immediate.

Ayatollah Ruhollah Khomeini, then the leader of the Islamic Republic, was initially inclined to retaliate by ordering Hezbollah to carry out suicide attacks against American and other Western interests.

However, he was persuaded by Hashemi Rafsanjani, then the ayatollah's closest aide, to take a deep breath and maintain a low profile. There was to be no retaliation. The remaining vessels of the Iranian navy were ordered to clear their movements with the US task force in advance to avoid any misunderstanding.

The battle

The battle, nicknamed by the US "Operation Praying Mantis", was followed in July by a tragic accident when the USS Vincennes shot down an Iran Air jetliner by mistake, killing all 290 passengers and crew.

Khomeini interpreted the accident as a deliberate escalation by the US and feared that his regime was in danger. Rafsanjani and other advisers used that fear to persuade the ayatollah to end the war with Iraq, something he had adamantly refused for eight years.

A broken Khomeini appeared on TV to announce that he was "drinking the chalice of poison" by accepting a UN-ordered ceasefire. He was no longer going to Karbala on his way to Jerusalem.

In his memoirs, Rafsanjani makes it clear that without the disastrous naval battle and the downing of the Iran Air jet, Khomeini would not have agreed to end a war that had already claimed a million Iranian and Iraqi lives.

The reason was that Khomeini was leader of a regime that lacked adequate mechanisms for self-restraint. He was the driver of a vehicle with no clutch or reverse-gear, let alone a brake, and thus was doomed to speed ahead until it hit something hard.

Interestingly, President Mahmoud Ahmadinejad used a similar image recently when he committed the regime to a no-compromise position on the nuclear issue. "This train has no reverse-gear and no brakes," he said.

Khomeini could have ended the war with Iraq years earlier, obtaining decent terms for Iran. He did not because the extremist nature of his regime made it impossible to even contemplate the fact that realism, prudence and compromise are key elements of good leadership.

Khomeini could not have ended the war. He needed Reagan to do it for him. If the Islamic Republic is a train without a reverse-gear and brakes, it does not need a conductor. It could race ahead until it hits something hard on its way.

IRAN: Former Iranian nuclear negotiator Hossein Mousavian is being detained on charges of espionage, Fars News Agency reported. Earlier reports did not indicate what charges had been brought against him. Mousavian was reportedly taken from his home April 30.

IRAN: Iranian Arabs in the southwestern province of Khuzestan have expressed a desire to separate from Iran, Al Jazeera reported. National Liberation Movement of Ahwaz head Tahir Aal Sayyed Nima said a lack of schools in villages and a ban on Arabic in schools and government institutions is an attempt "to assassinate our Arab identity" and has led to separatist goals.

Iran is in the throes of one of its most ferocious crackdowns on dissent in years, with the government focusing on labor leaders, universities, the press, women’s rights advocates, a former nuclear negotiator and Iranian-Americans, three of whom have been in prison for more than six weeks.

The shift is occurring against the backdrop of an economy so stressed that although Iran is the world’s second-largest oil exporter, it is on the verge of rationing gasoline. At the same time, the nuclear standoff with the West threatens to bring new sanctions.

The hard-line administration of President Mahmoud Ahmadinejad, analysts say, faces rising pressure for failing to deliver on promises of greater prosperity from soaring oil revenue. It has been using American support for a change in government as well as a possible military attack as a pretext to hound his opposition and its sympathizers.

Some analysts describe it as a “cultural revolution,” an attempt to roll back the clock to the time of the 1979 revolution, when the newly formed Islamic Republic combined religious zeal and anti-imperialist rhetoric to try to assert itself as a regional leader.

Equally noteworthy is how little has been permitted to be discussed in the Iranian news media. Instead, attention has been strategically focused on Mr. Ahmadinejad’s political enemies, like the former president, Mohammad Khatami, and the controversy over whether he violated Islamic morals by deliberately shaking hands with an unfamiliar woman after he gave a speech in Rome.

Mr. Khatami, the lost hope of Iran’s reform movement, felt compelled to rebut the accusation because such a handshake is religiously suspect, but contended that the crowd seeking to congratulate him for his speech was so tumultuous that he could not distinguish between the hands of men and women. Naturally a video clip emerged, showing the cleric in his typical gregarious style bounding over to the first woman who addressed him on the orderly sidewalk, shaking her hand and chatting amicably.

The dispute over the handshake occurred during a particularly fierce round of the factional fighting that has hamstrung the country since the 1979 revolution. Far more harsh examples abound.

Young men wearing T-shirts deemed too tight or haircuts seen as too Western have been paraded bleeding through Tehran’s streets by uniformed police officers who force them to suck on plastic jerrycans, a toilet item Iranians use to wash their bottoms. In case anyone misses the point, it is the official news agency Fars distributing the pictures of what it calls “riffraff.” Far bloodier photographs are circulating on blogs and on the Internet.

The country’s police chief boasted that 150,000 people — a number far larger than usual — were detained in the annual spring sweep against any clothing considered not Islamic. More than 30 women’s rights advocates were arrested in one day in March, according to Human Rights Watch, five of whom have since been sentenced to prison terms of up to four years. They were charged with endangering national security for organizing an Internet campaign to collect more than a million signatures supporting the removal of all laws that discriminate against women.

Eight student leaders at Tehran’s Amir Kabir University, the site of one of the few public protests against Mr. Ahmadinejad, disappeared into Evin Prison starting in early May. Student newspapers had published articles suggesting that no humans were infallible, including the Prophet Muhammad and Iran’s supreme leader, Ayatollah Ali Khamenei.

The National Security Council sent a stern three-page warning to all the country’s newspaper editors detailing banned topics, including the rise in gasoline prices or other economic woes like possible new international sanctions, negotiations with the United States over the future of Iraq, civil society movements and the Iranian-American arrests.

The entire campaign is “a strong message by Ahmadinejad’s government, security and intelligence forces that they are in control of the domestic situation,” said Hadi Ghaemi, an Iran analyst for Human Rights Watch. “But it’s really a sign of weakness and insecurity.”

At least three prominent nongovernment organizations that pushed for broader legal rights or civil society have been shuttered outright, while hundreds more have been forced underground. A recent article on the Baztab Web site said that about 8,000 nongovernment organizations were in jeopardy, forced to prove their innocence, basically because the government suspects all of them of being potential conduits for some $75 million the United States has earmarked to promote a change in government.

Professors have been warned against attending overseas conferences or having any contact with foreign governments, lest they be recruited as spies. The Iranian-Americans are all being detained basically on the grounds that they were either recruiting or somehow abetting an American attempt to achieve a “velvet revolution” in Iran. ---------

Page 2 of 2)

Analysts trace the broadening crackdown to a March speech by Ayatollah Khamenei, whose pronouncements carry the weight of law. He warned that no one should damage national unity when the West was waging psychological war on Iran. The country has been under fire, particularly from the United States, which accuses it of trying to develop nuclear weapons and fomenting violence in Iraq.

President Ahmadinejad and other senior officials have dismissed all the criticism as carping. The president blames the previous administration for inflation or calls it media exaggeration, while Tehran’s chief prosecutor, Said Mortazavi, said Iranians who oppose the Islamic Republic look for an excuse to criticize it.

After a meeting of senior police and judiciary officials in Tehran on June 19 to review what was described as “the public security drive,” the Iranian Labor News Agency quoted Mr. Mortazavi as saying that if the state did not protect public security, then “louts” and criminals “would be safe in society.

The three Iranian-Americans are being held in the notorious Section 209 of Evin Prison, the wing controlled by the Intelligence Ministry, and have been denied visits by their lawyers or relatives. Iran recognizes only their Iranian nationality and has dismissed any diplomatic efforts to intervene. A rally to demand their release is set for Wednesday outside the United Nations.

The three are Haleh Esfandiari, the director of the Middle East program at the Woodrow Wilson International Center for Scholars; Kian Tajbakhsh, an urban planning consultant with the Open Society Institute; and Ali Shakeri, of the Center for Citizen Peacebuilding at the University of California, Irvine. A fourth, Parnaz Azima, a journalist who works for Radio Farda, an American-financed station based in Europe, has been barred from leaving the country.

“People don’t want to come to conferences, they don’t even want to talk on the phone,” said Abbas Milani, the director of the Iranian studies program at Stanford University. “The regime has created an atmosphere of absolute terror.”

To the political crackdown, Mr. Ahmadinejad adds a messianic fervor, Mr. Milani noted, telling students in Qom this month that the Muslim savior would soon return.

The appeal of such a message may be limited, however. Iran’s sophisticated middle class wants to be connected to the world, and grumbles that the country’s only friends are Syria, Belarus, Venezuela and Cuba. But it might play well with Mr. Ahmadinejad’s main constituency.

“They are the poor, the rural,” said Vali Nasr of the Council on Foreign Relations. “They don’t travel abroad, they don’t go to conferences. He is trying to undermine the social and political position of his rivals in order to consolidate his own people.”

Most ascribe Mr. Ahmadinejad’s motives to blocking what could become a formidable alliance between the camps of Mr. Khatami and Hashemi Rafsanjani, both former presidents. Parliamentary elections are scheduled for early next year, and the next presidential vote in 2009.

“Having to face a single pragmatic conservative and reform block is extremely threatening,” Mr. Nasr said, hence the intimidation of all possible supporters.

Not that everyone has been intimidated. More than 50 leading economists published a harshly worded, open letter to the president saying his policies were bringing economic ruin. High unemployment persists, there has been little foreign investment and inflation is galloping, with gasoline alone jumping 25 percent this spring.

Gasoline rationing is expected within a month, with consumers so anxious about it, reported the Web site Ruz, financed by the Dutch government, that skirmishes broke out in long lines at some pumps on June 17.

Iran can prove a difficult country to separate into black and white. Amid all the recent oppression, for example, last week the public stoning of a couple — the punishment for adultery — was called off. Women’s rights advocates had been agitating against it.

Also, two recent movies touched off controversy as too racy. One depicted an extramarital affair, and the hero of the second was an abortion doctor who drank and gambled, and yet was so beloved of the patients he had seduced that they sent him bouquets on his wedding night.

In an attempt to deflect criticism that its standards had grown loose, the Ministry of Islamic Guidance, which vets all books, movies and gallery exhibits, issued a statement noting that both scripts had been approved under the former administration of Mr. Khatami.

Iranian Revolutionary Guard forces have been spotted by British troops crossing the border into southern Iraq, The Sun tabloid reported on Tuesday.Britain's defence ministry would not confirm or deny the report, with a spokesman declining to comment on "intelligence matters".

An unidentified intelligence source told the tabloid: "It is an extremely alarming development and raises the stakes considerably. In effect, it means we are in a full on war with Iran -- but nobody has officially declared it."

"We have hard proof that the Iranian Revolutionary Guard Corps have crossed the border to attack us. It is very hard for us to strike back. All we can do is try to defend ourselves. We are badly on the back foot."

The Sun said that radar sightings of Iranian helicopters crossing into the Iraqi desert were confirmed to it by very senior military sources.

In response to the report, a British defence ministry spokesman said: "There is evidence that explosive devices used against our troops in southern Iraq originated in Iran."

"Any Iranian link to armed militias in Iraq either through weapons supply, training or funding are unacceptable."

Britain has about 7,100 soldiers in Iraq, most of whom are based in the southern city of Basra and surrounding areas, though the government has pledged to reduce that to between 5,000 and 5,500 this year.

Iranians reportedly rioted June 27 over the government's move to engage in fuel rationing. Given Iran's lack of refining capabilities, Tehran is trying to control public gasoline consumption. The move, which at this stage is being implemented in a controlled fashion, is highly risky since it could lead to greater social and political unrest.

Analysis

As many as 50 gasoline stations were reportedly torched early June 27 in Iran as angry citizens protested fuel rationing measures. There are additional unconfirmed reports that gasoline stations in several other cities across the country were also burned. Elsewhere, protesters reportedly blocked the main highway in Tehran, and clashes were said to have led to at least three deaths.

This unrest came in the 24 hours after the government -- in an effort to curb the public's gasoline consumption -- imposed a system of fuel rationing that allows consumers 26.4 gallons per month (15.8 gallons if they use compressed natural gas). A long and intense back-and-forth has been taking place between Iran's parliament, which wanted to raise prices, and President Mahmoud Ahmadinejad's administration, which favored rationing for fear of increasing inflation, already at 17 percent. In the end, the government did a bit of both. On May 22, a 25 percent hike was introduced, setting the new price at roughly 42 cents per gallon, followed by rationing, which is being instituted via a smart card system.

The reasons for the price hike and rations are rooted in Iran's chronic lack of refining facilities. Though Iran is a major crude oil exporter, it must import 7.9 million gallons of gasoline per day to meet demand. In 2006, Iran spent some $5 billion on gasoline imports from some 16 countries, with most coming from the United Arab Emirates. The current budget has an allocation of $2.5 billion. The difference in the figures from last year and this year has led to a situation in which, according to National Iranian Oil Co. International Affairs Director Hojjatollah Ghanimifard, Tehran can afford gasoline supplies until roughly the middle of August, while the current fiscal year ends in March 2008.

The government will be forced to revise its rationing and import policies based on the results of the current rationing system, which is more or less a pilot program, because Tehran wants to cut down on its multibillion-dollar annual fuel import expenditures. The idea is to allocate money away from subsidized fuel and toward infrastructure projects.

Tehran is also trying to counter the rising demand for fuel, which has been growing at 10 percent annually. Moreover, the decision also factors in the uncertainty surrounding Iran's international position; additional sanctions over Tehran's nuclear program could put the clerical regime in even more of a crunch. The rationing also allows Iran's pragmatic conservatives, led by Expediency Council head Ali Akbar Hashemi Rafsanjani, to weaken the ultraconservatives, led by Ahmadinejad, by fueling public dissatisfaction with the president, in hopes that it could eventually lead to his exit from the political scene. The maverick leader is increasingly viewed as a liability in terms of domestic politics, and especially on the foreign policy front.

Actual rationale notwithstanding, the move is very risky because there is no such thing as managed chaos. The unrest generated by the fuel rationing could spiral out of control and threaten the entire system -- not just the ultraconservative administration. It is true that the Islamic republic has proven to be resilient since it was founded more than 28 years ago, and the clerical regime has managed to contain opposition forces so that none poses a challenge to the state. But tampering with public need for fuel could create the kind of unrest capable of seriously wounding the regime, especially at a time when it is playing a high-stakes game with the United States over Iraq and pursuing a controversial nuclear program.

Considering that Iran is in the middle of negotiations with Washington, this rationing policy could reveal Iranian vulnerability, which Washington might use as leverage against Tehran. Iran would not be engaging in such a move unless it was really financially pressed into doing so.

Ultimately, the regime hopes the negotiations over Iraq and its nuclear program will allow it to come out from underneath international sanctions, which will allow Tehran to acquire refining capabilities and reap other economic benefits. But until that happens, the Iranians are walking on thin ice.

A bit of a different take on the situation in Iran from an investment newsletter:

by John MauldinJune 29, 2007 In this issue: Iran Out of GasWhen an Enemy Is Self-Destructing, Stand Aside, , ,

Iran Out of Gas

But before we touch on the credit world, I want to briefly look at a development in the oil markets which I find intriguing. Dr. Woody Brock, in a recent paper on oil prices, wrote a rather interesting sentence, to wit, that Iran would not have net oil to export in 2014. I found that rather remarkable. Woody is very serious and sober-minded even for an economist, not given to rash analysis, but this was certainly a new idea to me. I knew they were importing most of their gasoline, as they do not have a great deal of refining capacity. As it turns out, there is much more to the story.

I have said for years that I expect Iran to be the new friend of the US sometime next decade, as the regime is not popular and the country is growing younger. (Think China, once an implacable enemy.) I thought that the impetus would be the lack of freedom and knowledge of how the world is better off coming from the internet, but it turns out that it may be a desire for more freedom combined with economic problems which help bring about regime change, much as in Russia last century.

How could a country with the third (or second, depending on which source you quote) largest oil reserves in the world not be churning out ever more black gold? The answer, as it almost always is for such problems, turns out to be governmental and not economic in nature. Let's start out with a few facts.

Oil provides more than 70% of the revenues of the government of Iran. The rise in oil prices has been a bonanza for the regime, allowing them to subsidize all sorts of welfare programs at home and mischief abroad. And one of the chief subsidies is gasoline prices.

Gasoline costs about $.34 cents a gallon in Iran, or 9 cents a liter. You can fill up your Honda Civic for $4.49. In the US it costs almost $40 (The price has risen since the chart below was made). In neighboring Turkey it costs almost $95. Look at the two charts below from the recent Foreign Policy Magazine. Notice that Iran is spending 38% of its national budget (almost 15% of GDP!) on gasoline subsidies!

Chart two:

And this situation is likely to get worse. Let's look at a rather remarkable peer-reviewed study done for the National Academy of Sciences by Roger Stern of Johns Hopkins University late last year. Stern's analysis is somewhat political, in that he is critical of current US Iranian policy, but this is just one of several studies which show the same thing (http://www.pnas.org/cgi/reprint/0603903104v1):

"A more probable scenario is that, absent some change in Irani policy ... [we will see] exports declining to zero by 2014-2015. Energy subsidies, hostility to foreign investment, and inefficiencies of its state-planned economy underlie Iran's problem, which has no relation to 'peak oil.' "

Iran earns about $50 billion a year in oil exports. The decline is estimated at 10-12% annually. In less than five years, exports could be halved and then disappear by 2015, predicted Stern.

Of course, you can go to a dozen web sites, mostly Iranian, which demonstrate that Iranian production will be double (or pick a number) by that time. The problem is, they all assume rather large sums of investment in the Iranian oil fields. Two projects which are "counted on" to be producing oil in 2008 have yet to be funded or started, as negotiations have broken down. Iran seems incapable of getting a deal actually done with a willing partner.

Part of this is a caused by the Iranian constitution, which does not allow for foreign ownership of oil reserves or fields. Instead, they try to negotiate to pay for investing in oil production. Called a buyback, any investment in an oil field is turned into sovereign Iranian government debt with a return of 15-17%. This is a very unpopular program at home, coming under much criticism from local government officials. Any deal that gets close to getting done comes under attack from lawmakers as being too good for foreign investors, so nothing is getting done.

Why not just fund the development themselves? They could, but the mullahs have elected to spend the money now rather than make investments which will not produce revenues for 4-6 years or more. They are investing around half the money needed just to maintain production, around $3 billion a year.

Let's look at a quote from Mohammed Hadi Nejad-Hosseinian, Iran's deputy oil minister for international affairs: "If the government does not control the consumption of oil products in Iran ... and at the same time, if the projects for increasing the capacity of the oil and protection of the oil wells will not happen, within 10 years, there will not be any oil for export." That's from their guy, not a Western academic.

When an Enemy is Self-Destructing, Stand Aside

Iran produced over 6 billion barrels of oil before the revolution in 1979. They now produce around 4 billion barrels a year. They are currently producing about 5% below their quota, which shows they are at their limits under current capacity. And production at their old fields is waning. The world recovery rate is about 35% from oil fields. Iran's is an abnormally low 24-27%. Normally, you pump natural gas back into an aging field (called reinjection) in order to get higher yields. Iran has enormous reserves of natural gas. Seems like there should be a solution.

However, if the National Iranian Oil Company (NOIC) sells it natural gas outside of Iran, it turns a profit. If it sells it in the country, then it can only get the lower, dramatically subsidized price. Guess which it chooses. Even so, internal natural gas demand is growing by 9% a year.

Not surprisingly, at 34 cents a gallon gasoline demand is rising 10% a year. This week, the government moved to ration supplies to about 22 gallons a month, which does not go far in the large cars preferred by younger Iranians. There have been riots, with people chanting "Death to Ahmadinejad." They take their right to plenty of cheap gas seriously. There is also widespread smuggling. Ten barrels of gasoline (easily hauled in a pickup) taken into Turkey yields about $3,000 in profit in a country with about that much GDP per person. Let's end with this section from Stern:

"Our survey suggests that Iran's petroleum sector is unlikely to attract investment sufficient to maintain oil exports. Maintaining exports would require foreign investment to increase when it appears to be declining. Other factors contributing to export decline are also intensifying. Demand growth for subsidized petroleum compounds from an ever-larger base. Growth rates for gasoline (11-12%), gas (9%), and electric power (7-8%) are especially problematic. Oil recovery rates have declined, and, with no remedy in sight for the gas reinjection shortage, this decline may accelerate.

"Depletion rates have increased, and, if investment does not increase, depletion will accelerate. If the regime actually proceeds with LNG exports, oil export decline will accelerate for lack of reinjection gas. In summary, the regime has been incapable of maximizing profit, minimizing cost, or constraining explosive demand for subsidized petroleum products. These failures have very substantial economic consequences.

"Despite mismanagement, the Islamic Republic's real oil revenues are nearly their highest ever as rising price compensates for stagnant energy production and declining oil exports. Despite high price, however, population growth has resulted in a 44% decline of real oil revenue per capita since the 1980 price peak. Moreover, virtually all revenue growth has been applied to pet projects, loss-making industries, etc. If price were to decline, political power sustained by the quadrupling of government spending since 1999 may not be sustainable. Yet we found no evidence that Iran plans fiscal retrenchment or any scheme to sustain oil investment.

"Rather, the government promises 'to put oil revenues on every table,' as if monopoly rents were not already the entree. Backing this promise is a welfare state built on the Soviet model widely understood as a formula for long-run economic suicide. This includes the 5-year plans, misallocation of resources, loss-making state enterprises, subsidized consumption, corruption, and oil export dependence that doomed the Soviet experiment. Therefore, the regime's ability to contend with the export decline we project seems limited."

Couldn't happen to a nicer bunch of mullahs. If gasoline subsidies are 40% of the national budget now, what will they be in 7 years at a growth of 10% a year? Can rationing work? No, but it can slow the economy.

Stern concludes that Iran may need nuclear power as their energy supply is dwindling. I find this conclusion rather preposterous, since if they wanted more energy, all they would have to do is allow foreign investment or invest more of their own money in their own fields. If the developed world will simply apply firm sanctions, Iran will have to reconsider its nuclear program, as their ability to finance mischief will erode as the mullahs divert their resources to domestic needs in order to maintain their dwindling popularity.

The cost of their current policies cannot be lost on the youth and educated people of the country. There is almost 14% unemployment among college graduates. Iran looks to me like Russia did in 1988. They were in the process of self-destruction, although few recognized it at the time. Iran is a matter of time.

The international community, led by the U.S. and the U.K., is now developing and debating new economic sanctions against Iran. This third round will be pivotal -- either by significantly increasing the cost to Iran of continuing to engage in illicit and dangerous activities, or by showing the regime that it can outlast whatever symbolic measures are levied against it without fear of being bled financially.

The first two rounds of targeted and graduated sanctions have failed to change Iran's nuclear calculus. Iran's chief nuclear negotiator continues to meet with senior EU officials, most likely to buy time, while Tehran refuses to accede to demands that it freeze its uranium enrichment program.

U.N. Security Council Resolutions 1737 and 1747, passed last December and March respectively, signaled seriousness about using financial measures against Iran. The first declared an international consensus to sanction Iran, and the second to target banks. In particular, Russian and Chinese support for these resolutions shocked Iran's President Mahmoud Ahmadinejad. Iran saw first-hand the weak U.N. pressure on Saddam Hussein and expected no worse treatment. Mr. Ahmadinejad reportedly predicted that neither Moscow nor Beijing would sign off on these resolutions. Their passage made the country's professional classes, which are proud of Iran's integration in the international system, feel the sting of diplomatic and economic isolation.

The most effective U.N. sanction was against Bank Sepah. Iran's fourth-largest and one of the most important financial institutions was shut out of the international financial system. But the package of measures was noteworthy less for the list of specific individuals and entities sanctioned than for starting a graduated process intended to force the regime to stop its illicit conduct.

For graduated sanctions to be effective, however, each deadline that passes without a change in Iran's behavior must be followed by another, more severe round of sanctions. To date, sanctions have had a primarily psychological impact, producing discontent within the powerful merchant (bazaari) classes and civil servants. Now the teeth must come out. Failure to follow up with tougher sanctions would undermine whatever progress sanctions have had to date.

* * *So this third round is the moment of truth. The danger is that today's diplomacy produces only more symbolic measures, watered down by multilateral negotiations whose goal is international consensus.

To avoid such failure, this round should fill the gaps left open by the first two U.N. resolutions. Specifically, it can target additional Iranian banks, and focus on companies controlled by the Iranian Revolutionary Guard Corps, especially those involved in the oil and gas sectors.

The next resolution must also close loopholes like the lack of a mandatory travel ban on designated Iranian officials. It should include a two-way arms embargo banning not only the export of arms from Iran but also the importation of arms to Iran. And it should create a U.N. monitoring team, preferably based in Dubai, to ensure member states comply with the U.N. sanctions regime. It should also add to the U.N. list the 23 Iranian persons and entities subjected to asset forfeiture abroad by the EU but not the U.N. Another useful tool would be to require strict inspections of all Iranian ships and aircraft to prevent violations of the arms ban or the import of banned or dual-use goods intended for Iran's nuclear program.

U.N. sanctions freezing the overseas assets of Bank Sepah were the first significant step toward isolating Iran from the international financial system. Sepah had facilitated the Iranian-North Korean missile procurement business and tried to conceal its role in these transactions.

Several additional Iranian banks are likely candidates to have their funds frozen overseas and slapped with a ban on doing business with them:

• Bank Melli was implicated in the December 2005 U.S. government fine of Dutch bank ABN Amro for violating the Iran/Libya Sanctions Act. Investigators found that Bank Melli used ABN Amro's Dubai office to conceal its role in illegal (under U.S. law) bank transfers to Iran.

• Bank Saderat was shut out of the U.S. financial system last September for its role in financing terrorism, including the transfer of tens of millions of dollars through branches in Europe to Lebanon's Hezbollah and EU-designated Palestinian terrorist groups like Hamas.

• U.S. Treasury officials have also cited the Central Bank of Iran as one of the state-owned banks that ask financial institutions to conceal their involvement in facilitating missile procurement, nuclear programs and terror financing.

Beyond banks, the next sanctions resolution must target the massive military-industrial complex controlled by the Iranian Revolutionary Guards, an elite paramilitary force. Considered the foundation of President Ahmadinejad's political powerbase, the Guards are also deeply involved in the country's proliferation activities. It also maintains a special branch -- the Qods Force -- responsible for arming, training and supporting terrorist groups like Hezbollah and Hamas and insurgents attacking Coalition and Iraqi forces in Iraq.

The Revolutionary Guards are primarily self-funded, with annual revenues from its businesses empire estimated at $1 billion and expected to rise to $1.5-$2 billion with new projects awarded since Mr. Ahmadinejad came to power. According to the U.S. State Department, the Guards are "taking on an increasingly influential role in Iran's economy, with IRGC-affiliated companies winning important government contracts." Freezing the assets of industries controlled by them, like the behemoth engineering firm Khatam ol-Anbia, would resonate with the merchant class that is already critical of the Guards' exclusive access to no-bid contracts.

Moreover, while the prospect of directly sanctioning Iran's oil industry makes the crude markets jittery, the reality is that international economic sanctions will ultimately only be successful if they impact Iran's lucrative oil and gas industries. Going after Khatam ol-Anbia, which was recently awarded a $2.09 billion contract by the Iranian government to develop parts of the South Pars natural gas field and a $1.3 billion contract to build parts of a pipeline, would be a strong shot across the bow of the Iranian oil industry. Such contracts would be put in jeopardy by U.N. sanctions, since no international company could legally do business with a company like Khatam ol-Anbia.

Referring to the unanimously passed sanctions resolutions, President Ahmadinejad recently warned the international community "not to play with the lion's tail." But Iran, unlike North Korea, is well integrated into the world economy and vulnerable to economic sanctions that shut the regime out of the international financial system. Iran can survive a pesky, symbolic sanctions regime like a lion swatting flies with its tail. The regime couldn't easily ignore sanctions with real teeth.

Mr. Levitt, a senior fellow and director of the Stein Program on Terrorism, Intelligence and Policy at the Washington Institute, is former deputy assistant secretary for intelligence and analysis at the U.S. Treasury Department. He is author of "Hamas: Politics, Charity and Terrorism in the Service of Jihad" (Yale University Press, 2006).

Mullahs Gone WildJohn Mauldin, Millennium Wave Advisors 07.05.07, 12:44 PM ETI want to briefly look at a development in the oil markets, which I find intriguing. Dr. Woody Brock, in a recent paper on oil prices, wrote a rather interesting sentence, to wit, that Iran would not have net oil to export in 2014.

I found that rather remarkable. Woody is very serious and sober-minded even for an economist, not given to rash analysis, but this was certainly a new idea to me. I knew they were importing most of their gasoline, as they do not have a great deal of refining capacity. As it turns out, there is much more to the story.

I have said for years that I expect Iran to be the new friend of the U.S. sometime next decade, as the regime is not popular and the country is growing younger. (Think China, once an implacable enemy.) I thought that the impetus would be the lack of freedom and knowledge of how the world is better off coming from the Internet, but it turns out that it may be a desire for more freedom combined with economic problems, which help bring about regime change, much as in Russia last century.

Buyback Letter subscribers are up 45% in the past six months with Big Lots. Click here for the complete buy list in the July issue of the Buyback Letter.How could a country with the third (or second, depending on which source you quote) largest oil reserves in the world not be churning out ever more black gold? The answer, as it almost always is for such problems, turns out to be governmental and not economic in nature. Let's start out with a few facts.

Oil provides more than 70% of the revenues of the government of Iran. The rise in oil prices has been a bonanza for the regime, allowing them to subsidize all sorts of welfare programs at home and mischief abroad. And one of the chief subsidies is gasoline prices.

Gasoline costs about $.34 cents a gallon in Iran, or 9 cents a liter. You can fill up your Honda Civic for $4.49. In the U.S. it costs almost $40. In neighboring Turkey it costs almost $95. Iran is spending 38% of its national budget (almost 15% of gross domestic product) on gasoline subsidies!

And this situation is likely to get worse. Let's look at a rather remarkable peer-reviewed study done for the National Academy of Sciences by Roger Stern of Johns Hopkins University late last year. Stern's analysis is somewhat political, in that he is critical of current U.S. Iranian policy, but this is just one of several studies that show the same thing:

"A more probable scenario is that, absent some change in Irani policy ... [we will see] exports declining to zero by 2014 to 2015. Energy subsidies, hostility to foreign investment and inefficiencies of its state-planned economy underlie Iran's problem, which has no relation to 'peak oil.' "

Iran earns about $50 billion a year in oil exports. The decline is estimated at 10% to 12% annually. In less than five years, exports could be halved and then disappear by 2015, predicted Stern.

Of course, you can go to a dozen Web sites, mostly Iranian, which demonstrate that Iranian production will be double (or pick a number) by that time. The problem is, they all assume rather large sums of investment in the Iranian oil fields. Two projects which are "counted on" to be producing oil in 2008 have yet to be funded or started, as negotiations have broken down. Iran seems incapable of getting a deal actually done with a willing partner.

Part of this is caused by the Iranian constitution, which does not allow for foreign ownership of oil reserves or fields. Instead, they try to negotiate to pay for investing in oil production. Called a buyback, any investment in an oil field is turned into sovereign Iranian government debt with a return of 15% to 17%. This is a very unpopular program at home, coming under much criticism from local government officials. Any deal that gets close to getting done comes under attack from lawmakers as being too good for foreign investors, so nothing is getting done.

Why not just fund the development themselves? They could, but the mullahs have elected to spend the money now rather than make investments that will not produce revenues for four to six years or more. They are investing around half the money needed just to maintain production, around $3 billion a year.

Let's look at a quote from Mohammed Hadi Nejad-Hosseinian, Iran's deputy oil minister for international affairs: "If the government does not control the consumption of oil products in Iran ... and at the same time, if the projects for increasing the capacity of the oil and protection of the oil wells will not happen, within 10 years, there will not be any oil for export." That's from their guy, not a Western academic.

When An Enemy Is Self-Destructing, Stand Aside Iran produced over 6 billion barrels of oil before the revolution in 1979. They now produce around 4 billion barrels a year. They are currently producing about 5% below their quota, which shows they are at their limits under current capacity. And production at their old fields is waning. The world recovery rate is about 35% from oil fields.

Iran's is an abnormally low 24% to 27%. Normally, you pump natural gas back into an aging field (called reinjection) in order to get higher yields. Iran has enormous reserves of natural gas. Seems like there should be a solution.

However, if the National Iranian Oil Company (NOIC) sells it natural gas outside of Iran, it turns a profit. If it sells it in the country, then it can only get the lower, dramatically subsidized price. Guess which it chooses. Even so, internal natural gas demand is growing by 9% a year.

Not surprisingly, at 34 cents a gallon, gasoline demand is rising 10% a year. This week, the government moved to ration supplies to about 22 gallons a month, which does not go far in the large cars preferred by younger Iranians. There have been riots, with people chanting "Death to Ahmadinejad." They take their right to plenty of cheap gas seriously.

There is also widespread smuggling. Ten barrels of gasoline (easily hauled in a pickup) taken into Turkey yields about $3,000 in profit in a country with about that much GDP per person. Let's end with this section from Stern:

"Our survey suggests that Iran's petroleum sector is unlikely to attract investment sufficient to maintain oil exports. Maintaining exports would require foreign investment to increase when it appears to be declining. Other factors contributing to export decline are also intensifying. Demand growth for subsidized petroleum compounds from an ever-larger base. Growth rates for gasoline (11% to 12%), gas (9%) and electric power (7% to 8%) are especially problematic. Oil recovery rates have declined, and, with no remedy in sight for the gas reinjection shortage, this decline may accelerate.

"Depletion rates have increased, and, if investment does not increase, depletion will accelerate. If the regime actually proceeds with LNG exports, oil export decline will accelerate for lack of reinjection gas. In summary, the regime has been incapable of maximizing profit, minimizing cost or constraining explosive demand for subsidized petroleum products. These failures have very substantial economic consequences.

"Despite mismanagement, the Islamic Republic's real oil revenues are nearly their highest ever as rising price compensates for stagnant energy production and declining oil exports. Despite high price, however, population growth has resulted in a 44% decline of real oil revenue per capita since the 1980 price peak. Moreover, virtually all revenue growth has been applied to pet projects, loss-making industries, etc.

If price were to decline, political power sustained by the quadrupling of government spending since 1999 may not be sustainable. Yet we found no evidence that Iran plans fiscal retrenchment or any scheme to sustain oil investment.

"Rather, the government promises 'to put oil revenues on every table,' as if monopoly rents were not already the entree. Backing this promise is a welfare state built on the Soviet model widely understood as a formula for long-run economic suicide.

This includes the five-year plans, misallocation of resources, loss-making state enterprises, subsidized consumption, corruption and oil export dependence that doomed the Soviet experiment. Therefore, the regime's ability to contend with the export decline we project seems limited."

Couldn't happen to a nicer bunch of mullahs. If gasoline subsidies are 40% of the national budget now, what will they be in seven years at a growth of 10% a year? Can rationing work? No, but it can slow the economy.

Stern concludes that Iran may need nuclear power as their energy supply is dwindling. I find this conclusion rather preposterous, since if they wanted more energy, all they would have to do is allow foreign investment or invest more of their own money in their own fields. If the developed world will simply apply firm sanctions, Iran will have to reconsider its nuclear program, as their ability to finance mischief will erode as the mullahs divert their resources to domestic needs in order to maintain their dwindling popularity.

The cost of their current policies cannot be lost on the youth and educated people of the country. There is almost 14% unemployment among college graduates. Iran looks to me like Russia did in 1988. They were in the process of self-destruction, although few recognized it at the time. Iran is a matter of time.

John Mauldin is president of investment advisory firm Millennium Wave Advisors, LLC. He may be reached by e-mail: John@FrontLineThoughts.com.

Al-Qaeda linked to operations from IranBy Stephen Fidler in LondonPublished: July 6 2007 22:04 | Last updated: July 6 2007 22:04Evidence that Iranian territory is being used as a base by al-Qaeda to help in terrorist operations in Iraq and elsewhere is growing, say western officials.

It is not clear how much the al-Qaeda operation, described by one official as a money and communications hub, is being tolerated or encouraged by the Iranian government, they said.

The group’s operatives, who link the al-Qaeda leadership in Pakistan with their disciples in Iraq, the Levant and North Africa, move with relative freedom in the country, they said.

The officials said the creation of some kind of al-Qaeda hub in Iran appears to be separate from the group of seven senior al-Qaeda figures, including Saad bin Laden, son of the group’s figurehead, that Iran is said to have detained since 2002.

A senior US official said the information had produced different assessments. “The most conservative, cautious intelligence assessment is that [the Iranian authorities] are turning a blind eye. But there are a lot of doubts about that,” he said.

“They are benefiting from the mayhem that AQ is carrying out. They don’t have to deal with al-Qaeda to benefit.”

Yet while Tehran might be content with the pressure al-Qaeda is placing on the US occupation in Iraq, Iran, as a state based on Shia Islam surrounded by mainly Sunni countries, has long been wary of al-Qaeda’s fierce brand of Sunni Islam.

A former Iranian official said Iran feared al-Qaeda and did not want to distract it from Iraq, dismissing any idea that Iran was supplying it with weapons. “Our relationship with al-Qaeda, at an intelligence level, can be said to be successful as long as they are at a distance,” he said.

Analysts say several Sunni extremist groups, some presumed linked to al-Qaeda and from various ethnic groups including Kurds, are in Iran. US-led military action in Iraq has led some to seek refuge over the border.

In the past, Tehran has also been a target of al-Qaeda attacks. A militant Sunni group based in Pakistan and possibly linked to al-Qaeda was suspected of the 1994 bombing of the shrine of the seventh Shia Imam, Reza, in Mashhad, killing 26 people.

Iran has also shown growing concern over Jundullah, a radical Sunni group from the restive south-east area of Balucestan that has carried out violent attacks in recent years.

Three years ago, Pakistani officials said members of al-Qaeda had begun leaving Pakistan’s border region close to Afghanistan and heading for Iraq. Of the routes used, going overland via Iran was the easiest. That traffic might have increased as links between al-Qaeda and its Iraq offshoot intensify.

Additional reporting by Gareth Smyth in Tehran and Farhan Bokhari in Islamabad

Ali Nikoo Nesbati glances carefully at the couple who have just sat down at the table next to him. Aged in their 20s and dressed in fashionable Western clothes, they seem like the kind of people who'd be natural supporters of the pro-democracy movement that he leads. Yet their decision to sit right next to him, when the rest of the café in the secluded Teheran alley is empty, is enough to make him suspicious.

"They were probably just ordinary customers," he whispered, as he ushered The Sunday Telegraph back on to the streets to continue the interview elsewhere. "But you never know. We were sat in that café for 45 minutes, which is long enough for the intelligence services to find out where we are."

Silenced: Abdullah Momeni, a prominent critic of the regime

A paranoia about who might be listening is an occupational hazard for activists like Mr Nesbati, whose campaigns for reform of Iran's theocratic government have led to constant run-ins with the secret police since the late Nineties.

But that sense of paranoia is now greater than ever, as a long-feared crackdown by Mahmoud Ahmadinejad, the country's puritanical leader, finally appears to be coming into force.

In what activists claim is a "cultural revolution" reminiscent of the Islamic Republic's turbulent birth in 1979, the regime has turned on its critics in all walks of life, harassing pro-democracy activists, shutting down dissident publications and dismissing independent-minded government officials and academics.

The onslaught has confounded early impressions that Mr Ahmadinejad, despite his religious zealotry, threats against Israel and defiance over Iran's nuclear programme, was not proving as aggressive as feared when it came to dealing with his internal opposition.

advertisementWhen members of Mr Nesbati's pro-democracy group staged a demonstration at Teheran's Amir Kabir University last December, in which they held photos of the president upside-down and denounced him as a "fascist", Mr Ahmadinejad surprised the world by requesting that they should not be arrested. He later cited his move as proof of the "absolute, total freedom" Iranians enjoyed.

The presidential pardon appears to have been short-lived. Eight of those protesters have since been jailed, the victims of what Mr Nesbati claims was a state-sponsored plot.

"Ahmadinejad said nobody would touch them, but the intelligence agencies smeared them by printing a blasphemous publication which they blamed on the students," he said. "We believe that was Ahmadinejad's revenge. We don't know if he ordered it himself, but we are convinced it was his supporters."

The students, one of whom has now spent more than two months in jail, are among 70 to have been arrested since Mr Ahmadinejad came to power; nearly half of these were seized in the last four months. More than 500 others have been suspended or expelled from university because of political activities, while about 130 student publications and 40 student organisations have been closed.

The accusations levelled against them typically include "endangering national security", spreading "rumours and lies" and "having relations with foreign intelligence agencies", all charges that Mr Nesbati has faced in his years as an activist, during which he has been arrested three times.

"They're not really charges as such, they just assume you are guilty and then ask why you did it," he said. "It's stressful the first time you're arrested but after that it's not so bad, although it depends what they do to you.

"Sometimes people get put in a room where they're made to stand facing a wall for 48 hours at a time. If you fall asleep, they hit you."

Campaigners say the crackdown began in March, when Ayatollah Ali Khamenei, Iran's Supreme Spiritual Leader and a man of similar hardline views to Mr Ahmadinejad, made a speech warning Iranians against the West's "psychological warfare". This was taken to be a reference to Washington's funding of opposition groups, pro-democracy movements and anti-regime satellite broadcasts.

The president, who is regarded by many as little more than a mouthpiece for Mr Khamenei, is thought to have taken this as a cue to move against any groups critical of the regime.

Women's rights groups and trade union leaders have reported being harassed, scholars have been put under pressure for refusing to sign anti-Israeli statements, and Iran's press has claimed to have received lists of banned topics, such as the effect of threatened United Nations sanctions. University professors have also been warned against attending conferences abroad, and several visiting Iranian-American academics remain in custody after being charged with espionage.

One Western diplomat in Iran said the situation was "uneasy". He said: "The crackdown has been more gradual than people expected, but over the last few months we have been getting a lot of stories of people being hassled."

Similar clampdowns took place under President Mohammad Khatami, Mr Ahmadinejad's reformist-minded predecessor, whose campaign to introduce a liberal regime was not always heeded by hardline elements in the security forces.

However, activists say that now there is no longer a voice in government to speak for them. "Back then people would get arrested, but then Khatami would use his influence to get them released," said Abdullah Momeni, the leader of Tahkim Vahdat, Iran's largest student organisation and a prominent critic of the regime. "Now those who are arrested are not even getting released."

The attacks on reformists come as they struggle to recover from the splits and apathy that led to them losing the 2005 elections to Mr Ahmadinejad. The movement is divided between more conservative elements, who prefer gradual change within the existing clerical system of government, and those who wish to replace the Islamic republic altogether with a Western-style, secular democracy.

Both sides have talked of forming an alliance to defeat Mr Ahmadinejad in the next presidential elections, but no mutually credible figure has emerged to head it.

The fact that many reformists were still at large to criticise the regime, meanwhile, was not grounds for optimism, said Mr Momeni. "Now the judiciary and parliament and president feel so powerful that they don't really see us as a threat any more. It shows that in a sense, we have lost our status and position in society."

ON THE FRONTWSJIran's Proxy War Tehran is on the offensive against us throughout the Middle East. Will Congress respond?

BY JOSEPH LIEBERMAN Friday, July 6, 2007 12:01 a.m. EDT

Earlier this week, the U.S. military made public new and disturbing information about the proxy war that Iran is waging against American soldiers and our allies in Iraq.

According to Brig. Gen. Kevin Bergner, the U.S. military spokesman in Baghdad, the Iranian government has been using the Lebanese terrorist group Hezbollah to train and organize Iraqi extremists, who are responsible in turn for the murder of American service members.

Gen. Bergner also revealed that the Quds Force--a special unit of the Iranian Revolutionary Guard Corps whose mission is to finance, arm and equip foreign Islamist terrorist movements--has taken groups of up to 60 Iraqi insurgents at a time and brought them to three camps near Tehran, where they have received instruction in the use of mortars, rockets, improvised explosive devices and other deadly tools of guerrilla warfare that they use against our troops. Iran has also funded its Iraqi proxies generously, to the tune of $3 million a month.

Based on the interrogation of captured extremist leaders--including a 24-year veteran of Hezbollah, apparently dispatched to Iraq by his patrons in Tehran--Gen. Bergner also reported on Monday that the U.S. military has concluded that "the senior leadership" in Iran is aware of these terrorist activities. He said it is "hard to imagine" Ayatollah Ali Khamenei--Iran's supreme leader--does not know of them.

These latest revelations should be a painful wakeup call to the American people, and to the U.S. Congress. They also expand on a steady stream of public statements over the past six months by David Petraeus, the commanding general of our coalition in Iraq, as well as other senior American military and civilian officials about Iran's hostile and violent role in Iraq. In February, for instance, the U.S. military stated that forensic evidence has implicated Iran in the death of at least 170 U.S. soldiers. Iran's actions in Iraq fit a larger pattern of expansionist, extremist behavior across the Middle East today. In addition to sponsoring insurgents in Iraq, Tehran is training, funding and equipping radical Islamist groups in Lebanon, Palestine and Afghanistan--where the Taliban now appear to be receiving Iranian help in their war against the government of President Hamid Karzai and its NATO defenders.

While some will no doubt claim that Iran is only attacking U.S. soldiers in Iraq because they are deployed there--and that the solution, therefore, is to withdraw them--Iran's parallel proxy attacks against moderate Palestinians, Afghans and Lebanese directly rebut such claims.

Iran is acting aggressively and consistently to undermine moderate regimes in the Middle East, establish itself as the dominant regional power and reshape the region in its own ideological image. The involvement of Hezbollah in Iraq, just revealed by Gen. Bergner, illustrates precisely how interconnected are the different threats and challenges we face in the region. The fanatical government of Iran is the common denominator that links them together.

No responsible leader in Washington desires conflict with Iran. But every leader has a responsibility to acknowledge the evidence that the U.S. military has now put before us: The Iranian government, by its actions, has all but declared war on us and our allies in the Middle East.

America now has a solemn responsibility to utilize the instruments of our national power to convince Tehran to change its behavior, including the immediate cessation of its training and equipping extremists who are killing our troops.

Most of this work must be done by our diplomats, military and intelligence operatives in the field. But Iran's increasingly brazen behavior also presents a test of our political leadership here at home. When Congress reconvenes next week, all of us who are privileged to serve there should set aside whatever partisan or ideological differences divide us to send a clear, strong and unified message to Tehran that it must stop everything it is doing to bring about the death of American service members in Iraq.

It is of course everyone's hope that diplomacy alone can achieve this goal. Iran's activities inside Iraq were the central issue raised by the U.S. ambassador to Iraq in his historic meeting with Iranian representatives in Baghdad this May. However, as Gen. Bergner said on Monday, "There does not seem to be any follow-through on the commitments that Iran has made to work with Iraq in addressing the destabilizing security issues here." The fact is, any diplomacy with Iran is more likely to be effective if it is backed by a credible threat of force--credible in the dual sense that we mean it, and the Iranians believe it.

Our objective here is deterrence. The fanatical regime in Tehran has concluded that it can use proxies to strike at us and our friends in Iraq, Afghanistan, Lebanon and Palestine without fear of retaliation. It is time to restore that fear, and to inject greater doubt into the decision-making of Iranian leaders about the risks they are now running.I hope the new revelations about Iran's behavior will also temper the enthusiasm of some of those in Congress who are advocating the immediate withdrawal of U.S. forces from Iraq. Iran's purpose in sponsoring attacks on American soldiers, after all, is clear: It hopes to push the U.S. out of Iraq and Afghanistan, so that its proxies can then dominate these states. Tehran knows that an American retreat under fire would send an unmistakable message throughout the region that Iran is on the rise and America is on the run. That would be a disaster for the region and the U.S.

The threat posed by Iran to our soldiers' lives, our security as a nation and our allies in the Middle East is a truth that cannot be wished or waved away. It must be confronted head-on. The regime in Iran is betting that our political disunity in Washington will constrain us in responding to its attacks. For the sake of our nation's security, we must unite and prove them wrong.

E-MAIL STORY PRINTER FRIENDLY VERSION TEHRAN, Iran — In a rare confirmation, Iran on Tuesday said a man convicted of adultery was stoned to death last week in a village in the northern part of the country, Iran's judiciary spokesman said.

Jafar Kiani was stoned to death in Aghchekand village, 124 miles west of the capital, Tehran, on Thursday, Ali Reza Jamshidi told reporters. It was the first time in years that Iran has confirmed such an execution.

"This verdict was carried out Thursday," Jamshidi told reporters.

Death sentences are carried out in Iran after they are upheld by the Supreme Court. Under Iran's Islamic law, adultery is punishable by stoning.

Jamshidi didn't elaborate on how the stoning was carried out, but under Islamic rulings, a male convict is usually buried up to his waist while a female criminal is buried up to her neck with her hands also buried.

Those carrying out the verdict start throwing stones and rocks at the convict until he or she dies

International human rights groups have long condemned stoning in Iran as a "cruel and barbaric" punishment.

"The execution has apparently gone ahead despite Iran's moratorium on execution by stoning, a moratorium that had been in effect since 2002," said Jose Diaz of U.N. High Commissioner for Human Rights.

"Stoning is in clear violation of international law," Diaz said Tuesday in Geneva. He said Arbour considered stoning to be a form of cruel, inhuman or degrading treatment or punishment that is prohibited under an international treaty which Iran has signed.

Also Tuesday in Norway, the Foreign Ministry said Iran's ambassador was summoned by Foreign Minister Jonas Gahr Stoere to protest the stoning.

Gahr Stoere was "deeply upset" that the death penalty had been carried out and called stoning an "inhumane and barbaric method of punishment," Foreign Ministry spokesman Frode Andersen said in Oslo.

The reported execution comes two weeks after international pressure, including protests from Norway, caused Iranian officials to delay carrying out the sentence against Kiani and his female companion, Mokarrameh Ebrahimi, who also was sentenced to death by stoning. It was not known if a date had been set for her execution.

The couple had reportedly been imprisoned for 11 years.

Stoning was widely imposed in the early years after the 1979 Islamic revolution that toppled the pro-Western Shah Mohammad Reza Pahlavi and brought hard-line clerics to power. But in recent years, it has rarely been applied, though the government rarely confirms when it carries out stoning sentences.

There is no official report of the last time Iran stoned someone to death, but there were unconfirmed media reports that a couple was stoned in 2006 in Mashhad, located in northeastern Iran.

A group of women's rights activists headed by feminist lawyer Shadi Sadr have been campaigning to have the sentence removed from Iran's statute books.

In the past years, Iran's reformist legislators demanded an end to death by stoning as a punishment for adultery, but opposition from hard-line clerics sidelined their efforts.

Keen observers of Iran have insisted for years that the Iranian people are pro-Western, indeed pro-American, while opposed to the largely unelected clerical regime that rules them. For the first time, Terror Free Tomorrow's unprecedented nationwide poll of Iran offers indisputable empirical proof that these commentators are dead-on in their assessment of the "Iranian street."

Discontent with the current system of government, the economy and isolation from the West is widespread throughout Iran. In this context, nuclear weapons are the lowest priority for the Iranian people. The overwhelming popular will to live in a country open to the West and the U.S., with greater economic opportunity, is a powerful plea from every region and segment of society. Iranians also speak with one voice in rejecting the current autocratic rule of their supreme leader and in courageously asking for democracy instead.

Iranian students: A new survey shows their fellow citizens want democracy too. These are among the significant findings of the first uncensored public opinion survey of Iran since President Ahmadinejad took office. The survey was conducted in Farsi by telephone from June 5 to June 18, 2007, with 1,000 interviews covering all 30 provinces of Iran (and a margin of error of 3.1%). The last poll to ask similar controversial questions was conducted in September 2003 by Abbas Abdi inside Iran. He was imprisoned as a result.

Developing nuclear weapons was seen as a very important priority by only 29% of Iranians. By contrast, 88% of Iranians considered improving the Iranian economy a very important priority. 80% of Iranians favor Iran offering full international nuclear inspections and a guarantee not to develop or possess nuclear weapons in return for outside aid.

Moreover, close to 70% of Iranians also favor normal relations and trade with the U.S. Indeed, in exchange for normal relations, a majority of Iranians even favor recognizing Israel and Palestine as independent states, ending Iranian support for any armed groups inside Iraq, and giving full transparency by Iran to the U.S. to ensure there are no Iranian endeavors to develop nuclear weapons.

Yet the most significant finding of our survey for the future of Iran's present rulers is the opposition to their current system of government. Some 61% of Iranians were willing to tell our pollsters -- over the phone no less -- that they oppose the current Iranian system of government, in which the supreme leader rules according to religious principles and cannot be chosen or replaced by direct vote of the people. More telling, over 79% of Iranians support a democratic system instead, in which the supreme leader, along with all leaders, can be chosen and replaced by a free and direct vote of the people. Only 11% of Iranians said they would strongly oppose having a political system in which all of their leaders, including the supreme leader, are chosen by popular election.

Iranians across all demographic groups oppose the unelected rule of the supreme leader in favor of electing all their leaders. While these views run stronger in Tehran, they are also held across all provinces of Iran, and in both urban and rural areas.

Terror Free Tomorrow's path-breaking survey of Iran demonstrates that the Iranian people are the best ally of the U.S. and the West against the government in Tehran. The considerable challenge is how to support the Iranian people while also achieving important U.S. goals, such as preventing the Iranian government from developing a nuclear arsenal.

There are no easy answers. The U.S., with France, Germany, Britain and the international community, however, should not spurn the clear will of Iranians. The implicit bet Iranians seem to want the world to make is to engage Iran now, and place the burden squarely on Iran's rulers to reject an offer that would clearly improve the life of the Iranian people themselves.

This does not mean that the U.S., Europe and the international community should abandon current sanctions or indeed fail to strengthen future sanctions against the regime. Yet since military options for responding to Iran entail even greater unknowable risks, and sanctions alone so far have proved inadequate, a strategy that also recognizes the consensus of the people of Iran themselves may realistically offer the best hope for all.

BAHRAIN/IRAN: Bahraini Foreign Minister Sheikh Khalid bin Ahmad al-Khalifa summoned Iran's charge d'affaires to answer questions about Tehran's official position on an editorial written by Hussain Shariatmadari, managing editor of Iranian daily newspaper Kayhan, in which Shariatmadari calls Bahrain an Iranian province, The Media Line reported. Shariatmadari, who is also an adviser to Ayatollah Ali Khamenei, the supreme leader of Iran, wrote that Bahrain was separated from Iran under an illegal agreement between the United States, the United Kingdom and the Shah of Iran.

The Bush Doctrine Lives The president isn't selling out Israel or relaxing his call for Palestinian democracy.

BY MICHAEL B. OREN Wednesday, July 18, 2007 12:01 a.m. EDT

JERUSALEM--Newspapers in Israel yesterday were full of stories about President Bush's call on Monday for the creation of a Palestinian state and an international peace conference. While Israeli officials were quoted expressing satisfaction with the fact that "there were no changes in Bush's policies," commentators questioned whether the Saudis would participate in such a gathering and whether Israeli Prime Minister Ehud Olmert, with his single-digit approval ratings, could uproot Israeli settlers from the West Bank.

But all the focus on the conference misses the point. Mr. Bush has not backtracked an inch from his revolutionary Middle East policy. Never before has any American president placed the onus of demonstrating a commitment to peace so emphatically on Palestinian shoulders. Though Mr. Bush insisted that Israel refrain from further settlement expansion and remove unauthorized outposts, the bulk of his demands were directed at the Palestinians.

"The Palestinian people must decide that they want a future of decency and hope," he said, "not a future of terror and death. They must match their words denouncing terror with action to combat terror."

According to Mr. Bush, the Palestinians can only achieve statehood by first stopping all attacks against Israel, freeing captured Israeli Cpl. Gilad Shalit, and ridding the Palestinian Authority of corruption. They must also detach themselves from the invidious influence of Syria and Iran: "Nothing less is acceptable."

In addition to the prerequisites stipulated for the Palestinians, Mr. Bush set unprecedented conditions for Arab participation in peace efforts. He exhorted Arab leaders to emulate "peacemakers like Anwar Sadat and King Hussein of Jordan" by ending anti-Semitic incitement in their media and dropping the fiction of Israel's non-existence. More dramatically, Mr. Bush called on those Arab governments that have yet to establish relations with Israel to recognize its right to exist and to authorize ministerial missions to the Jewish state.

Accordingly, Saudi Arabia, which has offered such recognition but only in return for a full withdrawal to the 1967 borders, will have to accept Israel prior to any territorial concessions. Mr. Bush also urged Arab states to wage an uncompromising battle against Islamic extremism and, in the case of Egypt and Jordan, to open their borders to Palestinian trade.

If the Israeli media largely overlooked the diplomatic innovations of Mr. Bush's speech, they completely missed its dynamic territorial and demographic dimensions. The president pledged to create a "contiguous" Palestinian state--code for assuring unbroken Palestinian sovereignty over most of the West Bank and possibly designating a West Bank-Gaza corridor. On the other hand, the president committed to seek a peace agreement based on "mutually agreed borders" and "current realities," which is a euphemism for Israel's retention of West Bank settlement blocks and no return to the 1967 lines.

Most momentous, however, was Mr. Bush's affirmation that "the United States will never abandon . . . the security of Israel as a Jewish state and homeland for the Jewish people." This means nothing less than the rejection of the Palestinians' immutable demand for the resettlement of millions of refugees and their descendents in Israel. America is now officially dedicated to upholding Israel's Jewish majority and preventing its transformation into a de facto Palestinian state.

Beyond these elements, the centerpiece of Mr. Bush's vision was the international conference. The Israeli press hastened to interpret this as a framework for expediting the advent of Palestinian statehood, yet it is clear that the conference is not intended to produce a state but rather to monitor the Palestinians' progress in building viable civic and democratic institutions. The goal, Mr. Bush said, will be to "help the Palestinians establish . . . a strong and lasting society" with "effective governing structures, a sound financial system, and the rule of law."

Specifically, the conference will assist in reforming the Palestinian Authority, strengthening its security forces, and encouraging young Palestinians to participate in politics. Ultimate responsibility for laying these sovereign foundations, however, rests not with the international community but solely with the Palestinians themselves: "By following this path, Palestinians can reclaim their dignity and their future . . . [and] answer their people's desire to live in peace." Unfortunately, many of these pioneering components in Mr. Bush's speech were either implicitly or obliquely stated, and one might have wished for a more unequivocal message, such as that conveyed in his June 2002 speech on the Middle East. Still, there can be no underrating the sea change in America's policy toward the Israeli-Palestinian conflict brought about by this administration. If, under U.N. Resolution 242, Israelis were expected to relinquish territory and only then receive peace, now the Arabs will have to cede many aspects of peace--non-belligerency and recognition--well in advance of receiving territory.

Similarly, Mr. Bush's commitment to maintain Israel's Jewish majority signals the total rescinding of American support for Resolution 194, which provided for refugee return. Moreover, by insisting that the Palestinians first construct durable and transparent institutions before attaining independence, Mr. Bush effectively reversed the process, set out in the 1993 Oslo Accords, whereby the Palestinians would obtain statehood immediately and only later engage in institution building. Peace-for-land, preserving the demographic status quo, and building a civil society prior to achieving statehood--these are the pillars of Mr. Bush's doctrine on peace.

But will it work? Given the Palestinians' historical inability to sustain sovereign structures and their repeated (1938, 1947, 1979, 2000) rejection of offers of a state, the chances hardly seem sanguine.

Much of the administration's hope for a breakthrough rests on the Palestinians' newly appointed prime minister, Salaam Fayyad, who is purportedly incorruptible. Nevertheless, one righteous man is unlikely to succeed in purging the Palestinian Authority of embezzlement and graft and uniting its multiple militias.

The Saudis will probably balk at the notion of recognizing Israel before it exits the West Bank and Jerusalem, and Palestinian refugees throughout the region will certainly resist any attempt to prevent them from regaining their former homes. Iran and Syria and their Hamas proxies can be counted on to undermine the process at every stage, often with violence.

Yet, despite the scant likelihood of success, Mr. Bush is to be credited for delineating clear and equitable criteria for pursuing Palestinian independence and for drafting a principled blueprint for peace. This alone represents a bold response to Hamas and its backers in Damascus and Tehran. The Palestinians have been given their diplomatic horizon and the choice between "chaos, suffering, and the endless perpetuation of grievance," and "security and a better life." So, too, the president is to be commended for not taking the easy route of railroading the Palestinians to self-governance under a regime that would almost certainly implode. Now his paramount task is to stand by the benchmarks his administration has established, and to hold both Palestinians and Israelis accountable for any failure to meet them.

Mr. Oren is a fellow at the Shalem Center in Jerusalem and the author of "Power, Faith, and Fantasy: America in the Middle East, 1776 to the Present" (Norton, 2007).

The United States plans to sell Gulf countries at least $20 billion worth of military hardware in the coming years, and will sign 10-year military aid packages with Egypt and Israel, valued together at $43 billion. According to Secretary of State Condoleezza Rice, Washington is "working with these states to give a chance to the forces of moderation and reform."

Oddly, on Friday the New York Times published a story roundly criticizing the Saudis for their "counterproductive" attitude in Iraq. Senior U.S. officials were quoted as saying that the kingdom had tried to discredit Iraqi Prime Minister Nouri al-Maliki by handing American officials forged documents depicting Maliki as an agent of Iran and an ally of Shiite cleric Muqtada al-Sadr. The Times revealed that "the Saudis have offered financial support to Sunni groups in Iraq. Of an estimated 60 to 80 foreign fighters who enter Iraq each month, American military and intelligence officials say that nearly half are coming from Saudi Arabia and that the Saudis have not done enough to stem the flow." U.S. officials also noted that "the majority of suicide bombers in Iraq are from Saudi Arabia and that about 40 percent of all foreign fighters are Saudi."

Why this story came out just before the announcement of the arms deals was unclear, though one could guess. By criticizing Riyadh publicly for the first time, and in such a blunt way, the Bush administration preempted, and therefore effectively neutralized, Saudi Arabia's critics in Washington who might seek to block the military transactions. But the Times article was also a warning to the Saudis that the U.S. was losing patience with the kingdom's behavior in Iraq, though the impact must have been dulled by revelations a day later that the Gulf states were central to the U.S. strategy of containing expanding Iranian power.

But perhaps most significantly, the leaks were designed to remind the Saudis that the Bush administration's failure in Iraq would only harm the kingdom itself, which might then find itself caught up in a regional sectarian conflagration devouring everyone. The subdued Saudi reaction to the American censure—the fact, too, that Riyadh knew the announcement of the arms deal was imminent—very likely meant the Saudis were expecting the administration's broadside beforehand.

The U.S. has dusted off an old template in the Persian Gulf, but with two twists. We're back to the days when the Gulf kingdoms and emirates were avid consumers of high-tech American weaponry, in the context of a broader quid pro quo where the U.S. took on the burden of security in the Gulf region in exchange for Saudi intervention to stabilize the oil markets. The two twists are that stable oil prices today can only really come by way of thwarting Iranian hegemony in the Gulf; and second, doing so means that the U.S. must replace Iraq as a regional counterweight to Iran.

Reverting to this policy is more astute than it looks. The U.S. approach to the Gulf throughout the Cold War years and up until 9/11 enjoyed bipartisan support. The large weapons contracts pleased members of Congress representing constituencies with defense-related industries; stable and low oil prices were good for everyone; and the American presence in the Persian Gulf was always an acceptable way of projecting U.S. power, without usually having to worry about casualties.

In reviving that general framework, one justified today through the containment of a threatening Iran, the administration is defining its military deployment in Iraq very differently. The priority is no longer promoting Iraqi and Middle Eastern democracy; it is ensuring that U.S. interests in the Middle East are preserved. We're back to the basics of foreign policy "realism." As Condoleezza Rice declared on Monday: "There isn't a doubt, I think, that Iran constitutes the single most important, single-country challenge to U.S. interests in the Middle East and to the kind of Middle East that we want to see."

If Iran is accepted as the arch enemy, then withdrawing from Iraq suddenly looks like a bad idea, particularly when influential critics of the conduct of the Iraq war like Michael O'Hanlon and Kenneth Pollack are writing that the U.S. is "finally getting somewhere in Iraq, at least in military terms." By anchoring Iraq policy in a consensus that previously existed vis-à-vis Saudi Arabia and the Gulf states, buttressing this with lucrative defense contracts, and gaining Israeli acquiescence for the sales, the administration has made it more difficult for Congress impose its will on President George W. Bush when it comes to the Iraqi conflict.

For the moment Congress is playing coy. Sen. Joseph Biden and Rep. Tom Lantos, who head the congressional committees that will consider the arms deals, are waiting for September to commit themselves. September also happens to be when Gen. David Petraeus and Ambassador Ryan Crocker submit their report on the progress of the U.S. military "surge" in Iraq. Biden and Lantos may use debate over the weapons contracts as a bargaining chip with the administration to define future Iraq policy, depending on what Petraeus and Crocker conclude.

But you have to wonder if Bush has not already won that round. Congress has been unable to impose an alternative Iraq strategy, and now the administration is trying to take advantage of that void. If we are to believe the administration in its new approach, the U.S. military in Iraq is now part of a regional security architecture. By approving the defense packages, Congress would be endorsing this Bush vision for the region. Maybe the president is not quite as dead as his detractors think.

Michael Young is opinion editor of the Daily Star newspaper in Lebanon and a contributing editor to reason.

The Arsenal of the Iraq Insurgency It's made in China. by John J. Tkacik Jr. 08/13/2007, Volume 012, Issue 45

This year, many truckloads of small arms and explosives direct from Chinese government-owned factories to the Iranian Revolutionary Guards have been transshipped to Iraq and Afghanistan, where they are used against American soldiers and Marines and NATO forces. Since April, according to a knowledgeable Bush administration official, "vast amounts" of Chinese-made large caliber sniper rifles, "millions of rounds" of ammunition, rocket-propelled grenades (RPGs), and "IED [improvised explosive device] components" have been convoyed from Iran into Iraq and to the Taliban in Afghanistan.

Secretary of Defense Robert Gates insists there is "no evidence as yet" that Tehran government officials are involved in shipping weapons to Iraq for use against U.S. forces, a judgment that seems to hinge on the view that the Revolutionary Guards are not part of the "government." But the administration source cautioned, "these are Revolutionary Guards trucks, and although we can't see the mullahs at the wheel, you can bet this is [Tehran] government-sanctioned."

In addition, in early June the Washington Times reported from Kabul that the Pentagon had evidence of new shipments of Chinese shoulder-fired HN-5 antiaircraft missiles reaching Taliban units in Afghanistan's Kandahar province. This shouldn't be surprising. The Pentagon has known since last August that the Iranian Revolutionary Guards had supplied Chinese-made C-802 antiship missiles with advanced antijamming countermeasures to Hezbollah in Lebanon. One slammed into the Israeli destroyer Hanit killing four sailors on July 14, 2006, during the Lebanon war.

The amount of raw intelligence on these Chinese arms shipments to Iran is growing, according to the official, who has seen it. Some items show Iran has made "urgent" requests for "vast amounts" of Chinese-made sniper rifles, apparently exact copies of the Austrian-made Steyr-Mannlicher HS50 which the Vienna government approved for sale to Iran's National Iranian Police Organization in 2004 (ostensibly to help customs officers police Iran's long and sparsely populated mountainous borders). At the time, the United States and Great Britain glowered at the Austrian government and slapped a two-year sales ban on Steyr-Mannlicher. Then in February, as if to confirm the worst suspicions, U.S. troops in Iraq uncovered caches of about 100 of the sniper weapons that looked like the Austrian rifles, the Daily Telegraph reported.

U.S. officials in Baghdad told reporters that at least 170 U.S. and British soldiers had been killed by well-trained and heavily armed snipers. On June 22, for example, an Army specialist was struck by a sniper as he climbed out of his Abrams tank during Operation Bull Run in Al Duraiya. Earlier that morning, the same sniper shot out the tank's thermal sights. He was "probably the most skilled sniper we've seen down here," the soldier's platoon leader told National Public Radio.

But were the Iraqi snipers indeed using Austrian-made armor-piercing .50 caliber weapons?

Perhaps not. There was little official American reaction to the discovery of the sniper rifle cache in February. In March, Steyr-Mannlicher claimed that U.S. authorities had yet to ask it for help in tracing the weapons, a simple matter of checking serial numbers, or even letting Austrian technicians examine the rifles. The Americans never approached the Austrian firearms firm. On March 29, Vienna's Wiener Zeitung quoted U.S. Central Command spokesman Scott Miller as admitting, "No Austrian weapons have been found in Iraq."

Upon hearing this, Steyr-Mannlicher owner Franz Holzschuh noted that the patents on the HS .50 expired "years ago," and they were being counterfeited all over the world. A quick Google search for "sniper rifles" confirms that China South Industries' AMR-2 12.7mm antimateriel rifle is a good replica of the HS .50.

In fact, Iran's Revolutionary Guards had placed large orders for Chinese sniper rifles, among other things. According to the administration official, U.S. intelligence picked up urgent messages from Iranian customers to Chinese arms factories pleading that the shipments were needed "quickly" and specifying that the "serial numbers are to be removed." The Chinese vendors, according to the intelligence, were only too happy to comply. The Chinese also suggested helpfully that the shipments be made directly from China to Iran by cargo aircraft "to minimize the possibility that the shipments will be interdicted."

According to sources who have seen the intel reports, the evidence of China-Iran arms deliveries is overwhelming. This is not a case of ambiguous intelligence. The intelligence points to Chinese government complicity in the Iranian shipments of Chinese small arms to Iraqi insurgents.

Yet top State Department and National Security Council officials prefer to believe that the relationship between Chinese government-owned and operated arms exporters and Iranian terrorists is "unofficial." Therefore, they ought not make too much out of it, lest the Chinese government be unhelpful with the North Koreans. This is the "China exception" at work; it pervades both the intelligence and national security bureaucracies. Moreover, there is a belief in some circles in the administration and on Capitol Hill that Iran's government can be "negotiated" with and therefore the activities of Tehran's Revolutionary Guards must not be seen as reflecting Iranian government policy.

Of course, it is inconceivable that the Iranian Revolutionary Guards send convoys of newly minted Chinese weapons into Iraq and Afghanistan without the clear intention of killing U.S. troops there. And it is equally inconceivable that the Chinese People's Liberation Army facilitates these shipments from its own factories and via its own air bases without the same outcome in mind. If, however, the shipments are occurring against the wishes of Beijing--if the Chinese central government cannot control the behavior of its own army--then the situation is dire indeed: How can anyone expect Beijing to restrain shipments of even more destructive weapons (missiles, submarines, torpedoes, nuclear weapons components) to rogue states? It is a prospect that U.S. officials simply cannot handle.

After leaks of this alarming intelligence surfaced in Bill Gertz's "Inside the Ring" column in the Washington Times, top Pentagon officials began to acknowledge the troubling truth behind them. On July 22, Agence France-Presse quoted the top U.S. military spokesman in Baghdad, Rear Admiral Mark I. Fox, as acknowledging: "There are missiles that are actually manufactured in China that we assess come through Iran" in order to arm groups fighting U.S.-led forces.

Deputy Undersecretary of Defense Richard Lawless told the Financial Times on July 7 that the United States has "become increasingly alarmed that Chinese armor-piercing ammunition has been used by the Taliban in Afghanistan and insurgents in Iraq." The FT quoted one unnamed U.S. official as saying that the United States would like China to "do a better job of policing these sales," as if China actually wanted to "police" its arms exports.

Lawless, revered in the Pentagon as a steely-eyed China skeptic, evinced less agnosticism to the FT, explaining that the country of origin was less important than who was facilitating the transfer. One might wonder why Beijing, as a matter of policy, would sell weapons to Iran for the clear purpose of killing American soldiers. "There is a great shortfall in our understanding of China's intentions," said Lawless of China's overall military policies, and "when you don't know why they are doing it, it is pretty damn threatening. . . . They leave us no choice but to assume the worst."

Why China is "doing it" need not be a mystery. In 2004, Beijing's top America analyst, Wang Jisi, noted, "The facts have proven that it is beneficial for our international environment to have the United States militarily and diplomatically deeply sunk in the Mideast to the extent that it can hardly extricate itself." It is sobering to consider that China's small-arms proliferation behavior since then suggests that this principle is indeed guiding Chinese foreign policy.

Beijing's strategists learned much from their collaboration with Washington during the 1980s, when the two powers prosecuted a successful decade-long campaign to drive the Soviet Union out of Afghanistan. The trick is to avoid a head-to-head confrontation with your adversary while getting insurgents to keep him tied down and taking advantage of his distraction to pursue your interests elsewhere. The cynical difference is that in the Afghan war of the 1980s, the U.S.-supported mujahedeen killed tens of thousands of Soviet troops, while in the early 21st century, Iranian (and Chinese)-supported insurgents in Afghanistan and Iraq are mostly killing Afghans and Iraqis.

The "China exception" notwithstanding, the ease with which Chinese state-owned munitions industries export vast quantities of small arms to violence-prone and war-ravaged areas--from Iraq and Afghanistan to Darfur--leaves no room to doubt that the Chinese government pursues this behavior as a matter of state policy. A regime with $1.3 trillion in foreign exchange reserves cannot claim that it "needs the money" and so turns a blind eye to dangerous exports by its own military. But until the scales fall from the eyes of Washington's diplomats and geopoliticians and they see China's cynical global strategy for what it is, few of the globe's current crises are likely to be resolved in America's--or democracy's--favor. In particular, U.S. soldiers and Iraqi and Afghan civilians will continue to be killed by Chinese weapons.

John J. Tkacik Jr., a senior fellow at the Heritage Foundation in Washington, D.C., served in Beijing, Guangzhou, Hong Kong, and Taipei in the U.S. Foreign Service.

Domestic Terror in Iran Iran has just carried out the largest wave of executions since 1984.

BY AMIR TAHERI Monday, August 6, 2007 12:01 a.m. EDT

It is early dawn as seven young men are led to the gallows amid shouts of "Allah Akbar" (Allah is the greatest) from a crowd of bearded men as a handful of women, all in hijab, ululate to a high pitch. A few minutes later, the seven are hanged as a mullah shouts: "Alhamd li-Allah" (Praise be to Allah).

The scene was Wednesday in Mashad, Iran's second most populous city, where a crackdown against "anti-Islam hooligans" has been under way for weeks.

The Mashad hangings, broadcast live on local television, are among a series of public executions ordered by President Mahmoud Ahmadinejad last month as part of a campaign to terrorize an increasingly restive population. Over the past six weeks, at least 118 people have been executed, including four who were stoned to death. According to Saeed Mortazavi, the chief Islamic prosecutor, at least 150 more people, including five women, are scheduled to be hanged or stoned to death in the coming weeks.

The latest wave of executions is the biggest Iran has suffered in the same time span since 1984, when thousands of opposition prisoners were shot on orders from Ayatollah Khomeini.

Not all executions take place in public. In the provinces of Kurdistan and Khuzestan, where ethnic Kurdish and Arab minorities are demanding greater rights, several activists have been put to death in secret, their families informed only days after the event.

The campaign of terror also includes targeted "disappearances" designed to neutralize trade union leaders, student activists, journalists and even mullahs opposed to the regime. According to the latest tally, more than 30 people have "disappeared" since the start of the new Iranian year on March 21. To intimidate the population, the authorities also have carried out mass arrests on spurious grounds. According to Gen. Ismail Muqaddam, commander of the Islamic Police, a total of 430,000 men and women have been arrested on charges related to drug use since April. A further 4,209 men and women, mostly aged between 15 and 30, have been arrested for "hooliganism" in Tehran alone. The largest number of arrests, totaling almost a million men and women according to Mr. Muqaddam, were related to the enforcement of the new Islamic Dress Code, passed by the Islamic Majlis (parliament) in May 2006.

Most of those arrested, he says, spent a few hours, or at most a few days, in custody as "a warning." By last week, 40,000 were still in prison. Of these, 20,363 men and women are held on charges related to violating the Islamic Dress Code. According to the Deputy Chief of Police Gen. Hussein Zulfiqari, an additional 6,204 men and women are in prison on charges of "sexual proximity" without being married.

The wave of arrests has increased pressure on the nation's inadequate prison facilities. At a recent press conference in Tehran, the head of the National Prisons Service, Ali-Akbar Yassaqi, appealed for a moratorium on arrests. He said Iran's official prisons could not house more than 50,000 prisoners simultaneously while the actual number of prisoners at any given time was above 150,000. Mr. Yassaqi also revealed that each year on average some 600,000 Iranians spend some time in one of the 130 official prisons.

Since Mr. Ahmadinejad ordered the crackdown, work on converting 41 official buildings to prisons has started, with contracts for 33 other prisons already signed. Nevertheless, Mr. Yassaqi believes that, with the annual prison population likely to top the million mark this year, even the new capacities created might prove insufficient.

There are, however, an unknown number of unofficial prisons as well, often controlled by the Islamic Revolutionary Guard Corps or militias working for various powerful mullahs. Last week, human rights activists in Iran published details of a new prison in Souleh, northwest of Tehran, staffed by militants from the Lebanese branch of Hezbollah. According to the revelations, the Souleh prison is under the control of the "Supreme Guide" Ali Khamenehi, and used for holding the regime's most "dangerous" political foes.

The regime especially fears the growing free trade union movement. In the past four months, free trade unionists have organized 12 major strikes and 47 demonstrations in various parts of the country. They showed their muscle on International Labor Day on May 1 when tens of thousands of workers marched in Tehran and 18 provincial capitals. The regime retaliated by arresting scores of trade unionists and expelling many others.

According to Rajab-Ali Shahsavari, leader of the Union of Contractual Workers, 25,795 unionists have been fired since April. He estimates that now over 1,000 workers are losing their jobs each day, as the regime intensifies its crackdown.

Worse still, the number of suspicious deaths among workers has risen to an all-time high. According to Deputy Labor Minister Ibrahim Nazari-Jalali, 1,047 workers have died in "work-related accidents" since April. Labor sources, however, point out that none of the accidents have been investigated and, in at least 13 cases, the workers who died may have been killed by goons hired by the regime.

The biggest purge of universities since Khomeini launched his "Islamic Cultural Revolution" in 1980 is also under way. Scores of student leaders have been arrested and more than 3,000 others expelled. Labeling the crackdown the "corrective movement," Mr. Ahmadinejad wants university textbooks rewritten to "cleanse them of Infidel trash," and to include "a rebuttal of Zionist-Crusader claims" about the Holocaust. Dozens of lecturers and faculty deans have been fired.

The nationwide crackdown is accompanied with efforts to cut Iranians off from sources of information outside the Islamic Republic. More than 4,000 Internet sites have been blocked, and more are added each day. The Ministry of Islamic Orientation has established a new blacklist of authors and book titles twice longer than what it was a year ago. Since April, some 30 newspapers and magazines have been shut and their offices raided. At least 17 journalists are in prison, two already sentenced to death by hanging.

The regime is trying to mobilize its shrinking base by claiming that the Islamic Republic is under threat from internal and external foes. It was in that context that the four Iranian-American hostages held in Tehran were forced to make televised "confessions" last month about alleged plots to foment a "velvet revolution."Over 40 people have been arrested on charges of espionage since April, 20 in the southern city of Shiraz. Khomeinist paranoia reached a new peak last week when the authorities announced, through the Islamic Republic News Agency, the capture of four squirrels in the Western city of Kermanshah and claimed that the furry creatures had been fitted with "espionage devices" by the Americans in Iraq and smuggled into the Islamic Republic.

Mr. Ahmadinejad likes to pretend that he has no worries except "Infidel plots" related to the Islamic Republic's nuclear ambitions. The truth is that, faced with growing popular discontent, the Khomeinist clique is vulnerable and worried, extremely worried. The outside world would do well to carefully monitor and, whenever possible, support the Iranian people's fight against the fascist regime in Tehran.

Iran today is not only about atomic bombs and Iranian-American hostages. It is also about a growing popular movement that may help bring the nation out of the dangerous impasse created by the mullahs.

European resistance to American triumphalism has its uses. But with respect to Iran, Europe's behavior is downright dangerous. Our welcome guest, French President Nicolas Sarkozy -- who just visited President Bush in Maine after vacationing in New Hampshire -- could change this.

Here's the problem: The U.S. stopped investing in Iran's energy industry in the 1990s thanks to sanctions imposed during Bill Clinton's presidency. Unfortunately, Europe stepped in to fill the void, with state-owned oil firms providing capital and energy technology. Today 80% of the Iranian government's revenue comes from oil exports and sales. Without Europe's support, the theocracy's fiscal lifeline would be a very thin thread.

That provides a little context to the lament common from the European Union that Iranian nuclear weapons are "inevitable," as if they were unrelated to energy investments from their member governments.

Europe has sacrificed regional stability for profit before. In 1983, as a global recession wracked France, then-President François Mitterrand pondered "the banker's dilemma" -- whether to extend credit to a troubled debtor in hope of rescuing prior loans. The debtor was Saddam Hussein, who had invaded Iran. Iraq had become France's best arms customer.

Mitterrand ultimately thought he had little choice. His treasury had become so dependent on Iraqi trade that, as a French businessman put it to Le Monde at the time, "Iraqi defeat would be a disaster for France." So France offered Saddam a spectacular new loan of five Super Entenard fighters (advanced warplanes).

But it wasn't enough and the Iran-Iraq war dragged on for nearly eight years, threatening to engulf other Gulf States, such as Saudi Arabia. As a result, the U.S. also supplied Iraq with weapons. Yet despite U.S. support for Saddam and many billions in new credit from EU states, Iran would not be defeated. Tragically, 750,000 soldiers would die on the battlefield following France's 1983 arms deal.

Today, EU credit underwrites what could become a greater disaster. One might think that Europe, ostensibly committed to a peaceful resolution of the Iranian crisis, would seize any opportunity to force conciliation upon Tehran. As in 1983, however, Europe has put short-term profit before long-term security.

European nations disguise this choice from themselves by looking to the United Nations Security Council to impose investment sanctions on Iran. This is a ruse, because Europeans always defer to whatever watered-down measures Russia or China agree to, only to watch as Iran rejects even these.

The exercise allows Europeans to believe they are behaving responsibly. In reality, as talks lead nowhere, credit and technology flow to Iran from the state-owned or -controlled oil firms of France (Total), Norway (Statoil), Italy (ENI) and Spain (Repsol). Clearly, standalone European sanctions could do a lot.

Unfortunately, Europe's oil firms are not merely investors in the terror state. France's Total has reached even lower. Hostage to its recent investments, Total has developed a foreign policy all its own: outright pro-Iranian advocacy. "The Iran Daily" reported recently that a Total executive "called on foreign entrepreneurs to avoid black propaganda and incorrect conceptions about the country."

Total seems to be complaining about verbatim repetition in the Western media of Iranian President Mahmoud Ahmadinejad's own utterances. The executive went on to boast of Total's investment leadership in Iran. While this astonishing behavior preceded Mr. Sarkozy's election, the president has neither rebuked the firm nor stood against further investment in Iran.

The good news is that Iran's regime is vulnerable economically. Government spending has outstripped revenue increases from rising oil prices, while oil exports are stagnant or declining. Gasoline rationing, once politically unthinkable, was implemented nationwide last month. Emblematic of its isolation is Iran's refusal to pay off a tiny debt owed to Russia for the Bushehr nuclear reactor. Iran's fear is that Russia will abandon it once the debt is retired. All of this, of course, makes it questionable whether Iranian nuclear weapons are really "inevitable."

However lamentable and confrontational President Bush's rhetoric may be, the U.S. has at least tried to constrain Iran peacefully using sanctions. Similar European pressure is desperately needed now. It's the one thing short of U.N. sanctions that might force Tehran to be conciliatory.

But that's up to Mr. Sarkozy. He could take the lead by pushing a prohibition on new French energy investment in Iran until that country verifiably rejects and abandons nuclear weapons development. He could also demand that fellow-EU leaders do the same. Oh, and Mr. Sarkozy, please come again.

Mr. Stern is a research associate in the department of Near Eastern Studies at Princeton University.

President Bush is annoyed that Afghan President Karzai and Iraqi President Maliki are both speaking about Iran in words reserved for an ally, rather than the main engine driving the terror wars in their countries. But if you look at the world through their eyes, it is easy enough to understand. They fear that the Americans will soon leave, and the Iranians will still be there. They know that Iran is a mortal threat, and they are now making a down payment on the insurance costs that are sure to come if the Democrats in Washington have their way. For extras, Maliki has certainly noticed that the United States is paying off the Middle Eastern Sunnis, hoping that the Saudis, Jordanians, and Gulf States will manage to contain Iran in the future. This cannot be good news in Baghdad, where the Shiites are struggling to put together a government capable of managing the country’s myriad crises.

All of this has been superbly summarized in Michael Yon’s latest ruminations on the course of the battle for Iraq:

Our military has increasing moral authority in Iraq, but the same cannot be said for our government at home. In fact, it’s in moral deficit because many Iraqis are increasingly frightened we will abandon them to genocide. The Iraqis I speak with couldn’t care less what is said from Washington but large numbers of them pay close attention to what some Marine Gunny says, or what American battalion commanders all over Iraq say. Some of our commanders could probably run for local offices in Iraq, and win.There are many reasons for the respect of Iraqis for our fighters, starting with the fact that the military is currently the best institution in America, and our military men and women are several notches above the politicians, intellectuals and journalists in moral fiber and bravery. You can see that in the way the military deals with the Iranian intrusion in Iraq and Afghanistan. The politicians, diplomats, and spooks downplay the Iranian role, reshaping the facts to fit their desire for a “negotiated solution” they know in their heart of hearts will never be accomplished. But our military officers, whose troops are being blown up by Iranian explosives or Iranian-trained suicide bombers or gunned down by Iranian-trained snipers, are laying out the facts for anyone who cares to know what’s going on. Happily, at least some folks are listening (thank you, Senator Lieberman). Most Iraqis know the truth; it’s the Americans who need the education.

That the Iranians are at the heart of the region’s violence is proven most every day. So while Karzai was publicly kissing up to Tehran, Colonel Rahmatullah Safi, the head of the border police along the Iranian frontier, told the London Times “it is clear to everyone that Iran is supporting the enemy of Afghanistan, the Taliban,” and U.S. Army Colonel Thomas Kelly confirmed that the infamous EPFs, the new generation of explosive devices that can penetrate most American armor, are now coming into Afghanistan. Col. Kelly notes that these devices “really are not manufactured in any other place to our knowledge than Iran.”

The same holds true in Iraq, where these devices accounted for a third of American combat deaths in July (99 such attacks were directed against us — an all-time high). General Odierno blamed 73 percent of attacks on Iranian-supported Shiite terrorists. As Michael Gordon reports for the New York Times,

American intelligence says that its report of Iranian involvement is based on a technical analysis of exploded and captured devices, interrogations of Shi’ite militants, the interdiction of trucks near Iran’s border with Iraq and parallels between the use of the weapons in Iran and in southern Lebanon by Hezbollah.

Some might suspect that our military leaders are presenting the case against Iran because they want to expand the war, and march on Tehran, but nothing of the sort is taking place. They are simply performing the task that theoretically lies with the so-called intelligence community. Our leaders have to be told the truth, even if it makes them scream. I have no doubt that Secretary of State Rice does not want to hear these things, because they give the lie to her claim that we are making progress in our talks with the Iranians. In fact, Iran has stepped up its terrorist activity in Iraq since we started talking to them. The actual words of Ambassador Crocker — who says he’s been very tough, and I’m inclined to believe him — don’t really matter to the mullahs; they say lots of things, too, and don’t expect them to be taken at face value. It’s the fact that (as they see it) we were compelled to come to them that matters.

In reality — for what little it matters nowadays, either here or in the Middle East — we are winning the battle of Iraq. The percentage increase in Iranian activity, combined with a drop in the number of attacks, is another way of saying that al Qaeda is being destroyed for a second time, and the Iranians are scrambling to fill the void. But they are on the run, just as is al Qaeda, as you can tell by the back-and-forth shuttling of their factotum Moqtadah al Sadr, between Iran and Iraq. If their scheme was working in Iraq, he’d sit still. He’s scrambling because they’re in trouble.

They’re in trouble at home, too. Indeed, things are so bad that the government itself has open fissures, the latest caused by the resignation of the minister of industry and mines, and by the public testimony of the minister of welfare:

The welfare minister, Abdol-Reza Mesri, appeared at the Majlis social committee on Saturday and announced that about 9.2 million Iranians live below the absolute poverty line. About 10.5 percent of residents in urban and 11 percent of residents in rural areas live below the absolute poverty line. Nevertheless, Mr. Mesri insisted that indicators used in computing the poverty line must be changed. The minister’s persistent suggestion to abandon internationally recognized methods of computing the poverty line has been met with the reaction of experts and professionals. In simple English, there is so much poverty in Iran that the minister wants to change the reporting requirements so that nobody can really know the full dimensions of the Iranian people’s misery. Even their current language (what is “the absolute poverty line” anyway?) is designed to mislead.

Iranians are not stupid people; they know they are ruled by tyrannical incompetents. Listen to the words of one Reza Zarabi, in the August 5 Jerusalem Post: “Iranians have become accustomed to dictators, yet an incompetent despot that bases his economic policies on the future benevolence of the coming Islamic Messiah is another thing altogether...It is quite remarkable for such economic damage and global ridicule to be heaped upon a nation in (so) short a time. Yet the policies of the current Iranian administration have left nothing for the imagination.”

I ask you, is this not a perfect description of a revolutionary situation? And you reply: So why aren’t we doing anything about it? Which, I think, is precisely the question our military leaders in Iraq, and the people of Iraq, Iran, and Afghanistan, are aiming at Washington.

--------------------------------------------------------------------------------On the BrinkWashington is a wonder on Iran.

By Michael Ledeen

President Bush is annoyed that Afghan President Karzai and Iraqi President Maliki are both speaking about Iran in words reserved for an ally, rather than the main engine driving the terror wars in their countries. But if you look at the world through their eyes, it is easy enough to understand. They fear that the Americans will soon leave, and the Iranians will still be there. They know that Iran is a mortal threat, and they are now making a down payment on the insurance costs that are sure to come if the Democrats in Washington have their way. For extras, Maliki has certainly noticed that the United States is paying off the Middle Eastern Sunnis, hoping that the Saudis, Jordanians, and Gulf States will manage to contain Iran in the future. This cannot be good news in Baghdad, where the Shiites are struggling to put together a government capable of managing the country’s myriad crises.

All of this has been superbly summarized in Michael Yon’s latest ruminations on the course of the battle for Iraq:

Our military has increasing moral authority in Iraq, but the same cannot be said for our government at home. In fact, it’s in moral deficit because many Iraqis are increasingly frightened we will abandon them to genocide. The Iraqis I speak with couldn’t care less what is said from Washington but large numbers of them pay close attention to what some Marine Gunny says, or what American battalion commanders all over Iraq say. Some of our commanders could probably run for local offices in Iraq, and win.There are many reasons for the respect of Iraqis for our fighters, starting with the fact that the military is currently the best institution in America, and our military men and women are several notches above the politicians, intellectuals and journalists in moral fiber and bravery. You can see that in the way the military deals with the Iranian intrusion in Iraq and Afghanistan. The politicians, diplomats, and spooks downplay the Iranian role, reshaping the facts to fit their desire for a “negotiated solution” they know in their heart of hearts will never be accomplished. But our military officers, whose troops are being blown up by Iranian explosives or Iranian-trained suicide bombers or gunned down by Iranian-trained snipers, are laying out the facts for anyone who cares to know what’s going on. Happily, at least some folks are listening (thank you, Senator Lieberman). Most Iraqis know the truth; it’s the Americans who need the education.

That the Iranians are at the heart of the region’s violence is proven most every day. So while Karzai was publicly kissing up to Tehran, Colonel Rahmatullah Safi, the head of the border police along the Iranian frontier, told the London Times “it is clear to everyone that Iran is supporting the enemy of Afghanistan, the Taliban,” and U.S. Army Colonel Thomas Kelly confirmed that the infamous EPFs, the new generation of explosive devices that can penetrate most American armor, are now coming into Afghanistan. Col. Kelly notes that these devices “really are not manufactured in any other place to our knowledge than Iran.”

The same holds true in Iraq, where these devices accounted for a third of American combat deaths in July (99 such attacks were directed against us — an all-time high). General Odierno blamed 73 percent of attacks on Iranian-supported Shiite terrorists. As Michael Gordon reports for the New York Times,

American intelligence says that its report of Iranian involvement is based on a technical analysis of exploded and captured devices, interrogations of Shi’ite militants, the interdiction of trucks near Iran’s border with Iraq and parallels between the use of the weapons in Iran and in southern Lebanon by Hezbollah.

Some might suspect that our military leaders are presenting the case against Iran because they want to expand the war, and march on Tehran, but nothing of the sort is taking place. They are simply performing the task that theoretically lies with the so-called intelligence community. Our leaders have to be told the truth, even if it makes them scream. I have no doubt that Secretary of State Rice does not want to hear these things, because they give the lie to her claim that we are making progress in our talks with the Iranians. In fact, Iran has stepped up its terrorist activity in Iraq since we started talking to them. The actual words of Ambassador Crocker — who says he’s been very tough, and I’m inclined to believe him — don’t really matter to the mullahs; they say lots of things, too, and don’t expect them to be taken at face value. It’s the fact that (as they see it) we were compelled to come to them that matters.

In reality — for what little it matters nowadays, either here or in the Middle East — we are winning the battle of Iraq. The percentage increase in Iranian activity, combined with a drop in the number of attacks, is another way of saying that al Qaeda is being destroyed for a second time, and the Iranians are scrambling to fill the void. But they are on the run, just as is al Qaeda, as you can tell by the back-and-forth shuttling of their factotum Moqtadah al Sadr, between Iran and Iraq. If their scheme was working in Iraq, he’d sit still. He’s scrambling because they’re in trouble.

They’re in trouble at home, too. Indeed, things are so bad that the government itself has open fissures, the latest caused by the resignation of the minister of industry and mines, and by the public testimony of the minister of welfare:

The welfare minister, Abdol-Reza Mesri, appeared at the Majlis social committee on Saturday and announced that about 9.2 million Iranians live below the absolute poverty line. About 10.5 percent of residents in urban and 11 percent of residents in rural areas live below the absolute poverty line. Nevertheless, Mr. Mesri insisted that indicators used in computing the poverty line must be changed. The minister’s persistent suggestion to abandon internationally recognized methods of computing the poverty line has been met with the reaction of experts and professionals. In simple English, there is so much poverty in Iran that the minister wants to change the reporting requirements so that nobody can really know the full dimensions of the Iranian people’s misery. Even their current language (what is “the absolute poverty line” anyway?) is designed to mislead.

Iranians are not stupid people; they know they are ruled by tyrannical incompetents. Listen to the words of one Reza Zarabi, in the August 5 Jerusalem Post: “Iranians have become accustomed to dictators, yet an incompetent despot that bases his economic policies on the future benevolence of the coming Islamic Messiah is another thing altogether...It is quite remarkable for such economic damage and global ridicule to be heaped upon a nation in (so) short a time. Yet the policies of the current Iranian administration have left nothing for the imagination.”

I ask you, is this not a perfect description of a revolutionary situation? And you reply: So why aren’t we doing anything about it? Which, I think, is precisely the question our military leaders in Iraq, and the people of Iraq, Iran, and Afghanistan, are aiming at Washington.

The United States has decided to designate Iran's Revolutionary Guard Corps, the country's 125,000-strong elite military branch, as a "specially designated global terrorist," according to U.S. officials, a move that allows Washington to target the group's business operations and finances.The Bush administration has chosen to move against the Revolutionary Guard Corps because of what U.S. officials have described as its growing involvement in Iraq and Afghanistan as well as its support for extremists throughout the Middle East, the sources said. The decision follows congressional pressure on the administration to toughen its stance against Tehran, as well as U.S. frustration with the ineffectiveness of U.N. resolutions against Iran's nuclear program, officials said.

The designation of the Revolutionary Guard will be made under Executive Order 13224, which President Bush signed two weeks after the Sept. 11, 2001, attacks to obstruct terrorist funding. It authorizes the United States to identify individuals, businesses, charities and extremist groups engaged in terrorist activities. The Revolutionary Guard would be the first national military branch included on the list, U.S. officials said -- a highly unusual move because it is part of a government, rather than a typical non-state terrorist organization.

The order allows the United States to block the assets of terrorists and to disrupt operations by foreign businesses that "provide support, services or assistance to, or otherwise associate with, terrorists."The move reflects escalating tensions between Washington and Tehran over issues including Iraq and Iran's nuclear ambitions. Iran has been on the State Department's list of state sponsors of terrorism since 1984, but in May the two countries began their first formal one-on-one dialogue in 28 years with a meeting of diplomats in Baghdad.

The main goal of the new designation is to clamp down on the Revolutionary Guard's vast business network, as well as on foreign companies conducting business linked to the military unit and its personnel. The administration plans to list many of the Revolutionary Guard's financial operations.

"Anyone doing business with these people will have to reevaluate their actions immediately," said a U.S. official familiar with the plan who spoke on the condition of anonymity because the decision has not been announced. "It increases the risks of people who have until now ignored the growing list of sanctions against the Iranians. It makes clear to everyone who the IRGC and their related businesses really are. It removes the excuses for doing business with these people."

For weeks, the Bush administration has been debating whether to target the Revolutionary Guard Corps in full, or only its Quds Force wing, which U.S. officials have linked to the growing flow of explosives, roadside bombs, rockets and other arms to Shiite militias in Iraq and the Taliban in Afghanistan. The Quds Force also lends support to Shiite allies such as Lebanon's Hezbollah and to Sunni movements such as Hamas and the Palestinian Islamic Jihad.

Although administration discussions continue, the initial decision is to target the entire Guard Corps, U.S. officials said. The administration has not yet decided when to announce the new measure, but officials said they would prefer to do so before the meeting of the U.N. General Assembly next month, when the United States intends to increase international pressure against Iran.

Formed in 1979 and originally tasked with protecting the world's only modern theocracy, the Revolutionary Guard took the lead in battling Iraq during the bloody Iran-Iraq war waged from 1980 to 1988. The Guard, also known as the Pasdaran, has since become a powerful political and economic force in Iran. Iranian President Mahmoud Ahmadinejad rose through the ranks of the Revolutionary Guard and came to power with support from its network of veterans. Its leaders are linked to many mainstream businesses in Iran.

"They are heavily involved in everything from pharmaceuticals to telecommunications and pipelines -- even the new Imam Khomeini Airport and a great deal of smuggling," said Ray Takeyh of the Council on Foreign Relations. "Many of the front companies engaged in procuring nuclear technology are owned and run by the Revolutionary Guards. They're developing along the lines of the Chinese military, which is involved in many business enterprises. It's a huge business conglomeration."The Revolutionary Guard Corps -- with its own navy, air force, ground forces and special forces units -- is a rival to Iran's conventional troops. Its naval forces abducted 15 British sailors and marines this spring, sparking an international crisis, and its special forces armed Lebanon's Hezbollah with missiles used against Israel in the 2006 war. The corps also plays a key role in Iran's military industries, including the attempted acquisition of nuclear weapons and surface-to-surface missiles, according to Anthony H. Cordesman of the Center for Strategic and International Studies.

The United States took punitive action against Iran after the November 1979 takeover of the U.S. Embassy in Tehran, including the breaking of diplomatic ties and the freezing of Iranian assets in the United States. More recently, dozens of international banks and financial institutions reduced or eliminated their business with Iran after a quiet campaign by the Treasury Department and State Department aimed at limiting Tehran's access to the international financial system. Over the past year, two U.N. resolutions have targeted the assets and movements of 28 people -- including some Revolutionary Guard members -- linked to Iran's nuclear program.

The key obstacle to stronger international pressure against Tehran has been China, Iran's largest trading partner. After the Iranian government refused to comply with two U.N. Security Council resolutions dealing with its nuclear program, Beijing balked at a U.S. proposal for a resolution that would have sanctioned the Revolutionary Guard, U.S. officials said.

The United States has just significantly upped the ante in negotiations with Iran over Iraq by threatening to designate Iran's Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization. The thought of designating the IRGC as a terrorist organization has been floating in the U.S. Congress for some time now, but Washington has a clear purpose in sending strong hints to Iran that the decision is imminent at this stage of the Iraq negotiations.

Analysis

The United States has just significantly upped the ante in negotiations with Iran over Iraq by threatening to designate Iran's Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization. The threat, leaked by anonymous U.S. officials to The Washington Post, is an intentional message to Iran.

The message is this: We are not content with your negotiating position, and if you think you are the only side that can ratchet up the level of pain in this situation, you are wrong.

Stratfor has long contended that the negotiations between Washington and Tehran are the key to any possible settlement on the Iraq issue, and that if a deal is to be reached, things will look like they are descending into chaos immediately prior. This is standard bargaining. Each side has to appear as though it is willing to walk away from the table, to the detriment of the other side.

The flip side to this gambit is that if a deal is not reached, Washington has just added much more fuel to the fire.

Sanctions are at best an imprecise tool, but Washington's heavy leaning on Europe has made them much more effective of late. The thought of designating the IRGC as a terrorist organization has been floating in the U.S. Congress for some time now, but Washington has a clear purpose in sending strong hints to Iran that the decision is imminent at this stage of the Iraq negotiations.

There are two implications to this designation. The first and most important right now is money. The United States has long grappled with the challenge of pressuring the international community -- which includes many of Tehran's major energy clients -- to enforce harmful sanctions against Iran. Instead of going through the formal U.N. Security Council sanctions process, Washington has focused instead on a financial strangulation policy that basically involves targeting a number of financial institutions worldwide. The message to these foreign businesses and banks is plain: Continue doing business with Iran and risk losing your business in the United States. Without major international banks' willingness to facilitate Iran's transactions, Tehran will have fewer and fewer options for making purchases without using actual cash. It simply is not possible to operate millions of dollars in transactions daily with suitcases full of cash.

Iran is genuinely suffering from the financial sanctions, which are generating significant domestic pressure on President Mahmoud Ahmadinejad. By designating the IRGC a terrorist organization, the United States has many more tools at its disposal to cut off funding to an international network that not only fights for Iran, but also finances its fighting through a number of business ventures, ranging from pipeline construction to pharmaceuticals. The current sanctions regime has been increasingly effective, and this new set of tools could put Iran's finances in lockdown. Labeling the IRGC as a terrorist entity, rather than an official state security apparatus, also could significantly hamper Iran's defense deals. By homing in on the wealthiest and most senior IRGC commanders, the United States is threatening the stability of the Islamic Republic and Ahmadinejad's support network.

There also is the symbolic aspect of further isolating Iran and making it appear as less of a legitimate player in the international community. Iran wants to be recognized as a legitimate regional power -- and it cannot be that when its Revolutionary Guard Corps is considered a terrorist organization.

There’s been ever more talk on Iran. President Bush — worried about both Americans being killed by Iranian mines in Iraq, and Tehran’s progress toward uranium enrichment — is ratcheting up the rhetoric. But so mirabile dictu is French president Nicolas Sarkozy. He suddenly, in the eleventh hour of the crisis, reminds the world that bombing Iran is still very possible (and he doesn’t specify by whom):

An Iran with nuclear arms is, to me, unacceptable, and I am weighing my words…And I underline France's full determination to support the alliance's current policy of increasing sanctions, but also to remain open if Iran makes the choice to fulfill its obligations. This policy is the only one that will allow us to escape an alternative, which I consider to be catastrophic. Which alternative? An Iranian bomb or the bombing of Iran. Note especially the French president’s reference to “us” and the logic of his syllogism: Iran can’t and won’t have the bomb; one catastrophic remedy is bombing; therefore someone must increase sanctions or someone will bomb Iran, as the least bad of two awful alternatives. He can say all that — without the global hatred that George Bush would incur had he said half that.

Mohamed Ahmadinejad is still ranting, but with more a sense of false braggadocio than ever: Iran will inherit the mantel of Middle East hegemony; America is running from Iraq; our policies have already failed in Iraq — blah, blah, blah.

So what exactly is the status of the crisis?

Recall the current U.S. policy — which, I think, so far remains bipartisan except for a few unhinged calls for full diplomatic engagement with this murderous regime:

Show the world that Americans tried the European route with the EU3 (Britain, France, German) negotiations that have so far failed; let the U.N. jawbone (so what?); help Iranian dissidents and democratic reformers; keep trying to stabilize Iran’s reforming neighbors in Afghanistan and Iraq; persuade Russia, China, and India to cooperate in ostracizing Iran; galvanize global financial institutions to isolate the Iranian economy; apprise the world that an Iranian nuclear device is unacceptable — and hope all that pressure works before the theocrats have enough enriched uranium to get a bomb and, as Persian nationalists, win back public approval inside Iran.

The degree to which Iran has neared completion of bomb-making will determine to what degree all of the above has hurt, helped, or had no effect.

But there are subtle indications that U.S. policy is slowly working, and that a strike now on Iran would be a grave mistake, in every strategic and political sense — not to mention the humanitarian one of harming a populace that may well soon prove to be the most pro-Western in the region.

It is surreal, after all, that a French president would confess that Iran getting the bomb is “unacceptable.” Sarkozy seems to recognize that a nuclear Iran won’t be happy with bullying neighboring oil producers and carving up Iraq, but will be soon blackmailing Europe on issues from trade to war.

So finally a French leader seems to allow that if the Europeans would just cease all financial relations with Teheran, freeze their assets, and stop sending them everything from sniper rifles to machine tools, then the crippled regime would start to stagger even more. And because France has been the most obstructionist in the past to U.S. efforts in the Middle East, its mere rhetoric is nearly beyond belief.

We have no leverage with China and Russia, of course. Their general foreign policy is reactive, based on the principle that anything that disturbs the United States and diverts its attention is de facto a positive development — excepting perhaps having another nuclear nut in Asia to go alongside North Korea and Pakistan.

Still, the recent humiliating disclosures about China’s 19th-century “Jungle”-type industry, and the growing anger at what Mr. Sarkozy called Russia’s “brutality,” show that neither country has earned much respect, and that either could pull in its horns a bit concerning Iran, with deft Western diplomacy.

There are other symptoms of progress. The Sadr brigades have purportedly announced a cessation of military operations — no doubt, because they are losing the sectarian kill-fest. But it may also be because Shiite animosity against them is growing. Perhaps too they are learning that Iran’s interest in Iraq is not always theirs, but simply fomenting violence of any kind that persuades the U.S. military to leave, including arming their enemies, both Sunni and Shiite.

Every Shiite gangster should note that Iran’s envisioned future is not one of coequal mafias, but rather a mere concession in the south that takes orders from the real bosses in the north. The jury is still out on whether it is true that Arab Shiites are Shiites first, and Arabs second or third. But at some point someone will start to figure out that Iran also gave arms and aid to al Qaeda to kill Iraqi Shiites.

No one knows quite what is going on in Iraq. Yet news that the surge is working and that violence is declining is also bad news for Tehran. Its worst nightmare is that Sunni tribes are no longer aping al Qaeda, but helping Americans. That will only turn attention back to Iranian-back killers. Meanwhile Sunni masters in the region — arming themselves to the teeth — are reminding their kindred Iraqi tribesmen that Iran, not America, is the real enemy of the Arab world.

And what is our stance? The United States calmly continues to arrest and “detain” Iranian agents inside Iraq — acts, of course, that enrage a kidnapping Iran. Apparently the only thing galling to an Iranian hostage-taker is the very idea that someone else would try such a thing openly and publicly and within the bounds of the rules of war. And by labeling the Revolutionary Guards Corps a terrorist organization, the United States is finally institutionalizing what the world already knows: Iran is a criminal state whose government and terrorists are one and the same.

There is also the ever-present, ever-unreliable news out of Iran itself of gas rationing, strikes, and a deteriorating economy. If all that good for us/bad for them news is true — with oil prices still sky-high, and sanctions as yet weak and porous — then it suggests that should financial ostracism be stepped up and become really punitive, and oil recede in price by even a few dollars, the regime would face widespread disobedience.

It would help things if Western elites started seeing Iran as Darfur. Teheran has butchered thousands of its own, kills the innocent in Iraq, and has stated that it would like to see the equivalent of a second Holocaust — all surely some grounds for at least a dig from Bono or a frown from Brad Pitt.

It doesn’t help Ahmadinejad that his supposedly successful, rocket-propelled proxy war against Israel a year ago, not only was not followed up by a round-two jihad this season, but seems on careful autopsy to have been a costly blunder that nearly destroyed the infrastructure of his southern Lebanese allies. No Iranian in gas line wants to learn that his scrimping went to pay for rebuilding the atomized apartment buildings of Arabs in Lebanon.

The oddest development of all is Iranian outrage at the U.N. — a sentiment almost impossible to entertain for any such corrupt, anti-American regime. But Iran’s chief delegate to the International Atomic Energy Agency, Ali-Ashgar Soltanieh, keeps screaming about international monitoring. He threatens this and that, which can only mean Iran fears the global humiliation of having inspectors expose the fact that puritanical, live-by-Koran clerics are serial liars.

Of course, there is no reason yet to believe that Iran’s megalomaniac plans are stalled. There is much less reason to think that the world is galvanizing fast or furiously enough against the loony Ahmadinejad. But there are some positive signs that Iran is not nearly as strong as it thinks, and the general winds of the world are blowing against it, ever so slowly — and thanks in large part to careful U.S. policy and the innately self-destructive tendencies of Iranian theocracy.

Note that the loud Democratic 2008 candidates have ceased calling for direct talks with Iran (the inexperienced Obama, the exception proving the rule). They can offer no policy other than the present one. For all the dangers, the spectacle of Ahmadinejad has been a great gift to the Western world — loudly embodying, in its raw, pure form, the evil which Iranian theocracy inevitably produces.

So we should continue with the present path — and not bomb or have surrogates bomb Iran. That option is still down the road. For as long as it is possible, the best-case scenario is not a smoking Iran, but a humiliated theocracy that slowly implodes before the world, displaying in their disgrace what the mullahs did to themselves — and perhaps a small reminder of those helpful shoves from us.

— Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University.

PARIS (Reuters) - French Foreign Minister Bernard Kouchner said on Sunday his country must prepare for the possibility of war against Iran over its nuclear program, but he did not believe any such action was imminent.

Seeking to ratchet up the pressure on Iran, Kouchner also told RTL radio and LCI television that the world's major powers should use further sanctions to show they were serious about stopping Tehran getting atom bombs, and said France had asked French firms not to bid for tenders in the Islamic Republic.

"We must prepare for the worst," Kouchner said in an interview, adding: "The worst, sir, is war."

Asked about the preparations, he said it was normal to prepare for various eventualities.

"We are preparing ourselves by trying to put together plans that are the chiefs of staff's prerogative (but) that is not about to happen tomorrow," he added.

Tehran insists it only wants to master nuclear technology to produce electricity, but it has yet to comply with repeated U.N. demands that it suspend uranium enrichment and other sensitive work that could potentially be used in producing weapons.

Kouchner's comments follow a similarly hawkish statement by French President Nicolas Sarkozy, who said last month in his first major foreign policy speech since taking office that a diplomatic push by the world's powers was the only alternative to "an Iranian bomb or the bombing of Iran."

Asked if France was involved in any planning towards war, he said: "The French army is not at the moment associated with anything at all, nor with any maneuver at all."

"PEACE IS IN YOUR INTEREST"

France has said repeatedly it wants the U.N. Security Council to pass tougher sanctions against Iran over its failure to dispel fears that it is secretly pursuing nuclear weapons.

"We do not want to signal anything other than 'peace is in your interest, and in ours too,"' Kouchner said, adding that the door should be left open to negotiations with Tehran, but Paris has made a suspension of nuclear work a condition for talks.

The United States, Germany, France and Britain have led a diplomatic drive to punish Iran for refusing to halt its uranium enrichment program. They succeeded in persuading reluctant Russia and China to back two U.N. sanctions resolutions.

Iranian President Mahmoud Ahmadinejad said Tehran would not give up its nuclear program.

"Of course we will not abandon our right to nuclear technology," he told state television. "They (the West) talks about imposing sanctions on Iran, but they can not do it."

Washington says the time has to expand the penalties and has called a September 21 meeting of the six powers to discuss a third sanctions resolution to submit to the U.N. Security Council.

Kouchner said France had asked its biggest companies, including oil giant Total and gas firm Gaz de France, not to bid for projects in Iran.

"We have already asked a certain number of our large companies to not respond to tenders, and it is a way of signaling that we are serious," Kouchner said.

"We are not banning French companies from submitting. We have advised them not to. These are private companies. But I think that it has been heard and we are not the only ones to have done this."

In addition, Paris and Berlin were preparing possible European Union economic sanctions against Tehran, Kouchner said.

"We have decided to ... prepare ourselves for possible sanctions outside the U.N. sanctions and which would be European sanctions. Our German friends proposed it. We discussed it a few days ago," Kouchner said.__________________

1139 GMT -- IRAN, UNITED STATES -- The Iranian military has the capacity to strike U.S. interests in the Middle East within a 1,250-mile range, Gen. Mohammad Hassan Koussechi, a top official in Iran's elite Islamic Revolutionary Guard Corps, said Sept. 17. The U.S. Army has encircled Iran, but if it strikes on any of the 2,000 Iranian targets it has identified, it will be attacked, Koussechi said. Separately, Iran's official media has launched a campaign accusing French President Nicolas Sarkozy of being driven by U.S. interests. The campaign was triggered by French Foreign Minister Bernard Kouchner's comments about a possible war with Iran.

1112 GMT -- IRAN -- Iran will reconsider its $15 billion liquefied natural gas (LNG) deal with French oil firm Total because of differences over the price paid to Tehran, Iranian Oil Minister Gholam-Hossein Nozari said Sept. 16. Iran, which believes Total's price to market the agreed 5.5 million tons of LNG is too high, asked Total to submit a new quote earlier this year. "We think this amount should be supplied to the market and not to Total," Nozari said.

0145 GMT -- FRANCE, IRAN -- French Foreign Minister Bernard Kouchner warned Sept. 16 that the world must prepare for the possibility of war with Iran over its nuclear development program. He said the possibility is unlikely, but that the world "must prepare for the worst."

Iran Warns German Banks: If You Leave, Don’t Come BackAugust 23, 2007 | From theTrumpet.comFinancial broadsides between Berlin and Tehran could presage more dangerous exchanges in the future.

European financial institutions appear to be bowing to U.S. pressure to pull out of Iran. The Islamic Republic has responded by threatening to bar these entities from ever doing business in Iran again. The episode reveals mounting tensions between Iran and Europe that could grow much worse with time.

Breitbart.com reported the Financial Times Deutschland as saying “that European financial institutions feared losing out on lucrative business with the United States if they remained active in Iran, after U.S. officials threatened the banks’ boards with consequences.” msnbc said the U.S. Treasury had conducted a “vigorous lobbying campaign” with banks worldwide to restrict their business with Iran.

Several European financial institutions have begun paring down their activities with Iranian customers as a result. On July 30, Germany’s largest bank, Deutsche Bank, said it will conclude its business in Iran this September.

Though the bank cited a lack of financial return on its investments there, observers noted that it made its decision shortly after receiving a visit from the U.S. Treasury undersecretary for terrorism and financial intelligence. Now Iran has fired its first shot back. Tehran says any bank that withdraws from Iran won’t be welcome back.

“We’re not happy with [Deutsche Bank’s] decision,” said the vice governor of Iran’s central bank to Financial Times Deutschland. “There is no guarantee that one can return when the good times are here again.” He said competitors throughout the region and in Asia and Russia would fill the void left by Germany. The German banks dismissively say they lose virtually nothing by pulling away from Iran.

Worth noting is that although Germany is heavily dependent upon oil imports, it appears to have weaned itself off Iranian oil this year.

After Talk of War, Cooler Words in France on Iran Sign In to E-Mail or Save This Print Reprints ShareDiggFacebookNewsvinePermalink

By KATRIN BENNHOLD and ELAINE SCIOLINOPublished: September 18, 2007MOSCOW, Sept. 17 — France’s foreign minister, Bernard Kouchner, sought Monday to tone down remarks he made in a radio and television interview the day before that the world had to prepare for possible war against Iran.

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Stephane Ruet, via Associated PressBernard Kouchner said Sunday that it was “necessary to prepare” for war with Iran. Attacked verbally by Iran and quietly criticized within his own government, Mr. Kouchner shifted the focus away from the threat of war and back to a call for hard negotiations as the way to force Iran to abandon key nuclear activities.

“The worst situation would be war,” Mr. Kouchner told journalists en route to Moscow. “And to avoid the worst, the French position is very clear: negotiate, negotiate, negotiate, and work with our European friends on credible sanctions.”

On Sunday, Mr. Kouchner, a Socialist known for his blunt talk, said in an interview broadcast on RTL radio and LCI television: “We will negotiate until the end. And at the same time we must prepare ourselves.”

Asked what he meant in referring to preparation, he replied, “It is necessary to prepare for the worst,” adding, “The worst, it’s war, sir.”

Asked again to explain himself, Mr. Kouchner announced that France was doing military contingency planning for an eventual war, saying, “We are preparing by trying first of all to put together plans that are the unique prerogative of the chiefs of staff, but that — it’s not for tomorrow.”

Lost in the off-the-cuff and freewheeling remarks about war planning was his other, less alarmist message: that France is committed to using diplomacy to resolve the nuclear crisis with Iran, that no military action is planned and that he did not believe there would be an American military intervention while President Bush was in office.

But his remarks fueled speculation that France was moving closer to the Bush administration position that all options — including war — are on the table.

On Monday, Prime Minister François Fillon, a former labor and education minister, appeared to support Mr. Kouchner, adding to the sense that France’s stance had hardened.

Asked during a visit to an army base at Angoulême about Mr. Kouchner’s mention of war against Iran, Mr. Fillon replied, “The foreign affairs minister is right because everybody can see that the situation in the Near East is extremely tense and that it’s getting worse.”

Like Mr. Kouchner, he stressed that all steps must be taken to avoid war.

Adding to the confusion, the Foreign Ministry seemed to distance itself somewhat from Mr. Kouchner’s remarks. A deputy spokesman, Denis Simonneau, referred journalists on Monday to a speech President Nicolas Sarkozy made last month in which he also said Iran could be attacked militarily if it did not curb its nuclear program, but that such an outcome would be a disaster. He gave no indication that France would ever participate in military action against Iran or even tacitly support such an approach.

The Foreign Ministry instructed its diplomatic missions around the world to use the same, more cautious, formulation, ministry officials said.

Mr. Kouchner’s reference to war on Sunday infuriated Iran, which accused France of moving closer to Washington.

“The use of such words creates tensions and is contrary to the cultural history and civilization of France,” said Iran’s Foreign Ministry spokesman, Muhammad Ali Hosseini, in a statement on Monday.

An editorial in the state-run Islamic Republic News Agency on Monday said, “The new occupants of the Élysée want to copy the White House.”

In Vienna, Mohamed ElBaradei, the director of the International Atomic Energy Agency, called for calm. “I would not talk about any use of force,” he said.

Stressing that only the Security Council could authorize the use of force, he urged the world to remember the lesson of Iraq before considering military action against Iran. “We need to be cool,” he said.

Certainly, France under President Sarkozy has toughened its policy toward Iran. Mindful that a third round of sanctions in the United Nations Security Council is unlikely for at least several months, France has begun to push an initiative for separate European sanctions against Iran.

Mr. Sarkozy’s predecessor, Jacques Chirac, also took a hard line against Iran’s nuclear program but was much less inclined to use sanctions, because, as he often said, he did not believe they were effective.

France’s foreign intelligence service has a shorter timeline for Iran’s prospects for producing a nuclear weapon than that of American intelligence, according to senior French officials. American intelligence analysts put that date between 2010 and 2015.

In Paris before heading to Moscow for bilateral talks on Iran and other issues, Mr. Kouchner said European countries should prepare their own sanctions outside of the United Nations.

“These would be European sanctions that each country, individually, must put in place with its own banking, commercial and industrial system,” he said. “The English and the Germans are interested in talking about this.”

While some officials inside the French government felt that Mr. Kouchner had done no harm with his mention of war, others said he should have been more disciplined in his choice of words.

“In an ideal world he wouldn’t have answered the questions in the way he did,” said one French official who spoke on condition of anonymity because he was not authorized to speak publicly on diplomatic issues. “His words were not completely thought out and scripted. It doesn’t mean there is a change of policy.”

Although the NY Times is always a source to be read with alertness for distortions, I found the following piece very interesting.=========

TEHRAN — When Mahmoud Ahmadinejad was first elected president, he said Iran had more important issues to worry about than how women dress. He even called for allowing women into soccer games, a revolutionary idea for revolutionary Iran.

Skip to next paragraph RelatedNew York Grudgingly Opens the Door (September 24, 2007) Times Topics:Mahmoud AhmadinejadIranEnlarge This Image

Vahid Salemi/Associated PressPresident Mahmoud Ahmadinejad, surrounded by Iranian officials, reading the Koran Sunday before leaving Tehran. Today, Iran is experiencing the most severe crackdown on social behavior and dress in years, and women are often barred from smoking in public, let alone attending a stadium event.

Since his inauguration two years ago, Mr. Ahmadinejad has grabbed headlines around the world, and in Iran, for outrageous statements that often have no more likelihood of being put into practice than his plan for women to attend soccer games. He has generated controversy in New York in recent days by asking to visit ground zero — a request that was denied — and his scheduled appearance at Columbia University has drawn protests.

But it is because of his provocative remarks, like denying the Holocaust and calling for Israel to be wiped off the map, that the United States and Europe have never known quite how to handle him. In demonizing Mr. Ahmadinejad, the West has served him well, elevating his status at home and in the region at a time when he is increasingly isolated politically because of his go-it-alone style and ineffective economic policies, according to Iranian politicians, officials and political experts.

Political analysts here say they are surprised at the degree to which the West focuses on their president, saying that it reflects a general misunderstanding of their system.

Unlike in the United States, in Iran the president is not the head of state nor the commander in chief. That status is held by Ayatollah Ali Khamenei, the supreme leader, whose role combines civil and religious authority. At the moment, this president’s power comes from two sources, they say: the unqualified support of the supreme leader, and the international condemnation he manages to generate when he speaks up.

“The United States pays too much attention to Ahmadinejad,” said an Iranian political scientist who spoke on the condition of anonymity for fear of reprisal. “He is not that consequential.”

That is not to say that Mr. Ahmadinejad is insignificant. He controls the mechanics of civil government, much the way a prime minister does in a state like Egypt, where the real power rests with the president. He manages the budget and has put like-minded people in positions around the country, from provincial governors to prosecutors. His base of support is the Basiji militia and elements of the Revolutionary Guards.

But Mr. Ahmadinejad has not shown the same political acumen at home as he has in riling the West. Two of his ministers have quit, criticizing his stewardship of the state. The head of the central bank resigned. The chief judge criticized him for his management of the government. His promise to root out corruption and redistribute oil wealth has run up against entrenched interests.

Even a small bloc of members of Parliament that once aligned with Mr. Ahmadinejad has largely given up, officials said. “Maybe it comes as a surprise to you that I voted for him,” said Emad Afrough, a conservative member of Parliament. “I liked the slogans demanding justice.”

But he added: “You cannot govern the country on a personal basis. You have to use public knowledge and consultation.”

Rather than focusing so much attention on the president, the West needs to learn that in Iran, what matters is ideology — Islamic revolutionary ideology, according to politicians and political analysts here. Nearly 30 years after the shah fell in a popular revolt, Iran’s supreme leader also holds title of guardian of the revolution.

Mr. Ahmadinejad’s power stems not from his office per se, but from the refusal of his patron, Ayatollah Khamenei, and some hard-line leaders, to move beyond Iran’s revolutionary identity, which makes full relations with the West impossible. There are plenty of conservatives and hard-liners who take a more pragmatic view, wanting to retain “revolutionary values” while integrating Iran with the world, at least economically. But they are not driving the agenda these days, and while that could change, it will not be the president who makes that call.

“Iran has never been interested in reaching an accommodation with the United States,” the Iranian political scientist said. “It cannot reach an accommodation as long as it retains the current structure.”

Another important factor restricts Mr. Ahmadinejad’s hand: while ideology defines the state, the revolution has allowed a particular class to grow wealthy and powerful.

When Mr. Ahmadinejad was first elected, it appeared that Iran’s hard-liners had a monopoly on all the levers of power. But today it is clear that Mr. Ahmadinejad is not a hard-liner in the traditional sense. His talk of economic justice and a redistribution of wealth, for example, ran into a wall of existing vested interests, including powerful clergy members and military leaders.

“Ahmadinejad is a phenomenon,” said Mohammad Ali Abtahi, a former vice president under the more moderate administration of Mohammad Khatami. “On a religious level he is much more of a hard-liner than the traditional hard-liners. But on a political level, he does not have the support of the hard-liners.”

In the long run, political analysts here say, a desire to preserve those vested interests will drive Iran’s agenda. That means that the allegiance of the political elite is to the system, not a particular president. If this president were ever perceived as outlasting his usefulness, he would probably take his place in history beside other presidents who failed to change the orientation of the system.

Iranians will go to the polls in less than two years to select a president. There are so many pressures on the electoral system here, few people expect an honest race. The Guardian Council, for example, controlled by hard-liners, must approve all candidates.

But whether Mr. Ahmadinejad wins or loses, there is no sense here in Iran that the outcome will have any impact on the fundamentals of Iran’s relations with the world or the government’s relation to its own society.

“The situation will get worse and worse,” said Saeed Leylaz, an economist and former government official. “We are moving to a point where no internal force can change things.”

EVER since he spoke at an anti-Zionism conference in Tehran last October, President Mahmoud Ahmadinejad of Iran has been known for one statement above all. As translated by news agencies at the time, it was that Israel "should be wiped off the map." Iran's nuclear program and sponsorship of militant Muslim groups are rarely mentioned without reference to the infamous map remark.

Here, for example, is R. Nicholas Burns, the under secretary of state for political affairs, recently: "Given the radical nature of Iran under Ahmadinejad and its stated wish to wipe Israel off the map of the world, it is entirely unconvincing that we could or should live with a nuclear Iran."

But is that what Mr. Ahmadinejad said? And if so, was it a threat of war? For months, a debate among Iran specialists over both questions has been intensifying. It starts as a dispute over translating Persian but quickly turns on whether the United States (with help from Israel) is doing to Iran what some believe it did to Iraq — building a case for military action predicated on a faulty premise.

"Ahmadinejad did not say he was going to wipe Israel off the map because no such idiom exists in Persian," remarked Juan Cole, a Middle East specialist at the University of Michigan and critic of American policy who has argued that the Iranian president was misquoted. "He did say he hoped its regime, i.e., a Jewish-Zionist state occupying Jerusalem, would collapse." Since Iran has not "attacked another country aggressively for over a century," he said in an e-mail exchange, "I smell the whiff of war propaganda."

Jonathan Steele, a columnist for the left-leaning Guardian newspaper in London, recently laid out the case this way: "The Iranian president was quoting an ancient statement by Iran's first Islamist leader, the late Ayatollah Khomeini, that 'this regime occupying Jerusalem must vanish from the page of time,' just as the Shah's regime in Iran had vanished. He was not making a military threat. He was calling for an end to the occupation of Jerusalem at some point in the future. The 'page of time' phrase suggests he did not expect it to happen soon."

Mr. Steele added that neither Khomeini nor Mr. Ahmadinejad suggested that Israel's "vanishing" was imminent or that Iran would be involved in bringing it about. "But the propaganda damage was done," he wrote, "and Western hawks bracket the Iranian president with Hitler as though he wants to exterminate Jews."

If Mr. Steele and Mr. Cole are right, not one word of the quotation — Israel should be wiped off the map — is accurate.

But translators in Tehran who work for the president's office and the foreign ministry disagree with them. All official translations of Mr. Ahmadinejad's statement, including a description of it on his Web site (www.president.ir/eng/), refer to wiping Israel away. Sohrab Mahdavi, one of Iran's most prominent translators, and Siamak Namazi, managing director of a Tehran consulting firm, who is bilingual, both say "wipe off" or "wipe away" is more accurate than "vanish" because the Persian verb is active and transitive.

The second translation issue concerns the word "map." Khomeini's words were abstract: "Sahneh roozgar." Sahneh means scene or stage, and roozgar means time. The phrase was widely interpreted as "map," and for years, no one objected. In October, when Mr. Ahmadinejad quoted Khomeini, he actually misquoted him, saying not "Sahneh roozgar" but "Safheh roozgar," meaning pages of time or history. No one noticed the change, and news agencies used the word "map" again.

Ahmad Zeidabadi, a professor of political science in Tehran whose specialty is Iran-Israel relations, explained: "It seems that in the early days of the revolution the word 'map' was used because it appeared to be the best meaningful translation for what he said. The words 'sahneh roozgar' are metaphorical and do not refer to anything specific. Maybe it was interpreted as 'book of countries,' and the closest thing to that was a map. Since then, we have often heard 'Israel bayad az naghshe jographya mahv gardad' — Israel must be wiped off the geographical map. Hard-liners have used it in their speeches."

The final translation issue is Mr. Ahmadinejad's use of "occupying regime of Jerusalem" rather than "Israel."

To some analysts, this means he is calling for regime change, not war, and therefore it need not be regarded as a call for military action. Professor Cole, for example, says: "I am entirely aware that Ahmadinejad is hostile to Israel. The question is whether his intentions and capabilities would lead to a military attack, and whether therefore pre-emptive warfare is prescribed. I am saying no, and the boring philology is part of the reason for the no."

But to others, "occupying regime" signals more than opposition to a certain government; the phrase indicates the depth of the Iranian president's rejection of a Jewish state in the Middle East because he refuses even to utter the name Israel. He has said that the Palestinian issue "does not lend itself to a partial territorial solution" and has called Israel "a stain" on Islam that must be erased. By contrast, Mr. Ahmadinejad's predecessor, Mohammad Khatami, said that if the Palestinians accepted Israel's existence, Iran would go along.

When combined with Iran's longstanding support for Palestinian Islamic Jihad and Hezbollah of Lebanon, two groups that have killed numerous Israelis, and Mr. Ahmadinejad's refusal to acknowledge the Holocaust, it is hard to argue that, from Israel's point of view, Mr. Ahmadinejad poses no threat. Still, it is true that he has never specifically threatened war against Israel.

So did Iran's president call for Israel to be wiped off the map? It certainly seems so. Did that amount to a call for war? That remains an open question.

Qods (Jerusalem) Day in Iran: ‘The Nation of Muslims Must Prepare for the Great War So As to Completely Wipe Out the Zionist Regime and to Remove This Cancerous Growth’

On the occasion of Qods (Jerusalem) Day, which was observed this year in Iran on October 20, 2006, several conservative Iranian newspapers published editorials praising the resistance against Israel and urging Israel's destruction. [1]

The editorials, which appeared in the conservative dailies Resalat and Kayhan, reflected Iranian President Mahmoud Ahmadinejad's Qods Day speech, in which he said: "The existence of this regime [i.e. Israel] has been based on military threat, on military strength, and on its myth of invincibility. Today, by the grace of God, this myth has been shattered, with the help of the believers in Palestine, and thanks to the self-sacrifice and the belief of the Hizbullah commanders. Today, the Zionists do not feel safe, not even in their homes, [or] anywhere in the world."

The articles in Resalat and Kayhan said thatthe recent Lebanon war was only the first battle on the way to the elimination of Israel, and expressed the hope that the war will serve as a catalyst for an extensive Islamic uprising against Israel.

The following are excerpts from the two articles:

Kayhan: "Hizbullah Destroyed at Least Half of Israel in The Lebanon War... Now Only Half the Path [To Its Destruction] Remains"On October 19, 2006, the conservative daily Kayhan, which is close to Iran's Supreme Leader 'Ali Khamenei, published an article on the occasion of Qods (Jerusalem) Day: [2] "...This year was a decisive one for Palestine and the Islamic Middle East region. Those opposed to the liberation of Jerusalem, Palestine, and the Middle East linked arms and sought to publicly topple the free foundations of sacred Jerusalem. America, Europe, Russia, many of the heads of Arab regimes in the region, and the Zionists all collaborated in this process, assuming that by means of a series of operations they would dry up the heart of the freedom of Jerusalem, in Lebanon, Syria, Iraq, and Iran, and that by means of a terrible blow against these four countries they would close this dossier forever.

"On this basis [U.S. Secretary of State] Condoleezza Rice came to the Middle East in the first days of the Lebanon war and said: 'The new Middle East is like a newborn, and therefore we must suffer its birth pangs.' Then she clearly declared [the need] to eradicate the Lebanese Hizbullah. [But] the axis of the West, the East, and the Zionists against Hizbullah ended in its defeat and in a reversal in the balance [of power].

"Hizbullah stood fast in Israel's 33-day war against Lebanon, and proved that the destruction of Israel was easier [work] than some of the Arab governments think - [namely,] that the destruction of Israel is impossible. The 33-day war proved that the intelligence-security capability of Israel is not so great as to be immeasurable and that it is possible to triumph over the Israeli Air Force - which had been considered the element that brought about the victory of the Israeli regime over the Arabs in the five previous wars - and this is said without disregarding its range of technological capabilities.

"When the air force of the Zionist Regime, together with its warships, besieged the shores of Lebanon - from the port of Tripoli in the north to the port of Tyre in the south - it retreated after Hizbullah's blow to the advanced Saar 5 warship at a distance of 12 miles from the coast of Beirut... thus it was proven that, by means of an offensive operation that need not be equal to Israel's moves, it is possible to neutralize the Zionist navy.

"With the downing of one of the Tel Aviv regime's advanced night-flight helicopters at the height of the war... it became clear to all that the Zionist regime's air force, despite 33 successive days of bombing, had not managed to deliver serious harm to the capability of Hizbullah's command and missiles. It was proven that it is possible to damage the Israeli Air Force from a distance...

"The 33-day war ended without any of the goals that had been declared by the Zionist government and the commanders of its military being attained - and this was the first time that Israel was forced to accept its complete downfall...

"In the 33-day war, the Lebanese Hizbullah destroyed at least 50% of Israel [and therefore] half the path to the liberation of Jerusalem equals 33 days. Now, only (at most) 50% of the path [to Israel's destruction] remains. This remaining 50% is easier than the 50% that was already accomplished. Now, in the face of the degree of fear and lack of confidence that has been deeply implanted in [all] parts of the Zionist regime, the Muslim peoples of the region, and particularly the four Arab countries neighboring Palestine [i.e. Israel] - Egypt, Jordan, Syria, and Lebanon - are full of hope and confidence, and they have no doubt, that they will be able to very quickly overcome the Zionist regime...

"According to this description, just as in one 33-day war more than 50% of Israel was destroyed, and the hope of its supporters for the continued life of this regime was broken, it is likely that in the next battle, the second half will also collapse.

"On that day... Jordan will not be able to prevent the Jordanian Islamists from operating through the long Jordan-Palestine border, and the millions of Egyptian Islamists... will not let the Sinai-Israel border remain quiet, and the Syrian Golan Heights will not remain as a [mere] observer of the battle. That day is not so far off."Resalat: "The Great War is Ahead of Us, [And Will Break Out] Perhaps Tomorrow, or in Another Few Days, or in a Few Months, or Even in a Few Years... Israel Must Collapse"In an October 22, 2006 editorial titled "Preparations for the Great War," the conservative daily Resalat wrote: [3] "...The Qods Day marches in the month of Ramadan this year were held at a time when the takeover by the global arrogance [the U.S.] was shattered with Israel's defeat by the Lebanese Hizbullah.

"For the first time in the 60 years of its disgraceful life, the Zionist regime - the West's beloved in the Middle East - tasted the taste of defeat, and the citizens of this regime trembled at the menace of Hizbullah's missiles. There can be no doubt at all that the silence of the parents of this illegal creature [i.e. Israel] is temporary, and that they [i.e. the West] will not be willing to sit quietly before their wounded child and [just] worry at its misfortune.

"The Zionist regime and its supporters are, without doubt, preparing for the great war, in order to settle this conflict in one fell swoop. They will not be willing to relinquish the occupied lands of Ghajar and the Shab'a Farms - this in order to keep Lebanon's wound open. This regime's military movements in the north of occupied Palestine, the unconditional military and economic aid it receives from America, and [Israel's] effort to imitate Europe in the military arena [in] missile and satellite [technology] - all attest to this regime's preparedness for renewed war against Hizbullah.

"This sense of danger on the part of the supporters of the counterfeit Israeli regime is not limited to the Islamic resistance in Lebanon [i.e. Hizbullah]. On the contrary; the American plan of [U.S. Secretary of State Condoleezza] Rice, which is titled 'Conditions for Neutralizing the Aspiration for Growth in the Islamic World and Coordination with the Arab Governments in the Region in Order to Contain the Shi'ites,' attests to the West's preparations for a wide confrontation with the Middle East's [Islamic] awakening movement in the third millennium. This is, of course, the first time in [the history of] America-Zionist relations that Washington has turned to the heads [of the Arab states] after an Israeli defeat, and asked them to unite and help it [i.e. Israel], in order to compensate for the losses in the war...

"In any event, we must be alert. Sights and rumors can tell us about the movements of this regime [i.e. Israel] in the coming months. Hizbullah was the undisputed victor of the 33-day war against Israel, but as the honorable Supreme Leader [Ali Khamenei] said at Friday prayers in Tehran: 'The defeated in this event are not, and will not remain, passive. The process is not over [yet]. They are busy with operations and efforts aimed at stopping the results of this disappointment and defeat [they suffered], because the blow that landed upon them was a hard one...'

"The Muslim peoples in the region must stop this conspiracy before it happens. The people's unprecedented participation in Qods [Jerusalem] Day this year attests to the continuation of the path of resistance against the Zionist regime... But on the first front of the resistance, that is, the Hizbullah [front], maintaining control over the 'Iron Triangle' [4] region and declaring it a closed military area can prevent the weakening of the forces of the Islamic resistance. In any event, America's effort is to turn UNIFIL's role into one of confrontation with and weakening of Hizbullah - but doubtless this deception will be neutralized by the alertness of [Hizbullah Secretary-General] Hassan Nasrallah.

"It must not be forgotten that the great war is ahead of us, [and it will break out] perhaps tomorrow, or in another few days, or in a few months, or even in a few years. The nation of Muslims must prepare for the great war, so as to completely wipe out the Zionist regime, and remove this cancerous growth. Like the Imam [Ayatollah] Khomeini said: 'Israel must collapse."

[1] Qods (Jerusalem) Day is observed yearly in Iran on the last Friday of Ramadan, in accordance with the orders of Ayatollah Ruhollah Khomeini. It marks Iran's aspiration for the liberation of all Palestine.

[2] Kayhan (Iran), October 19, 2006.

[3] Resalat (Iran), October 22, 2006.

[4] The Iron Triangle is a term for the area around the city of Tyre in Lebanon that Hizbullah used as its main launching pad for Katyushas aimed at Israel during the July-August 2006 Lebanon war.